The key differentiator in being a fully demand-driven business from a traditional demand/supply based business is the agility that a business has in reacting to the changing consumer demands. The changes could be quick, minor, or overall, irrespective of that the quickness of action, and more importantly, a system that can capture this and give impactful insights, makes you a truly demand-driven organization.
The role of efficient Demand Signal Management in making your business totally demand-driven has to be comprehended and established for a seamless demand centric manufacturing setup. Let’s now look at Demand Signal Management (DSM) in detail and understand its key components:
How DSM works?
Simply put, it is a data warehouse which collects, integrates, cleanses, synchronizes, analyses, and disseminates customer related data which is capable of giving striking and clean information on the changing demands of the customers. The primary objective behind setting up a DSM is for businesses to turn totally demand-driven and establish a clear balance between demand and supply, leading to low out-of-stock situations, maintaining low inventories, gauging changing demand patterns on time, and so on.
Key Components of Demand Signal Management
Collecting data from multiple sources is one of the fundamental aspects of a DSM system. Generally it accumulates data from sources including: point-of-sale (POS) systems, retailer information, wholesaler data, e-commerce activities and sales, inventory ratio of sale and supply, customer retention and loyalty data, promotional impact on demand, rate of sale, third party data, competitor’s sales index, industry demand, social media data, data from mobile user platform, geographical distribution of demand, and so on. The primary objective is to bring intelligence on board and identify the nuances of being demand-driven.
Quite obviously the next step is to harmonize the collected data and information so that meaningful conclusions can be drawn from it. Typically a DSM assists the decision-making departments like: supply chain management, inventory management, category management, sales and marketing, demand forecasting team, inventory transportation, promotion and event management, customer’s purchasing pattern analysis team, product R&D, investors, and so on. This implies that the data shall be cleansed and made available in a way which becomes easier for these departments to use the information and base their operations on.
The process of harmonizing involves data pruning, data categorization, considering newer data categories, evaluating data validity, syndicating and correlating data, indicating decision effectiveness, availability of data in the best possible form and time.
The additional intelligence that a DSM adds to the final available information is what makes it markedly different from the traditional systems. This real-time information availability for all the required stakeholders gives a unique power to the CPG manufacturers in truly understanding the demand and aligning with it.
Enterprise Demand Signal Management
Scaled to an enterprise level a proper DSM can become the foundation for an effective information framework leading to a larger eco-system of demand and supply related predictive analytical processes and applications. As this is still an evolving system its applications and reach will also be growing leading to defining demand and supply based information.
Benefits of Demand Signal Management
An established DSM can not only cater to all the decision making departments of your business but can deliver striking consumer related information like: frequency of demand changes, demand changes with respect to competitor’s products, purchasing patterns, lifetime of a particular demand pattern, and so on.
With effective Demand Signal Management, manufacturers can:
- Reduce the uncertainty of demand forecasts
- Eliminate out of stock situations
- Balance level of inventory and related cost
- Improve customer experience
- Meet customer demands without lag time
- Get a primary assistive decision making tool
All these will lead to a fertile situation that can make both the consumers and manufacturers content.
The role of DSM is now fast moving away from a ‘could be tried’ thing to a more needed system that should be replaced by the existing supply-demand managing system, because the more knowledge you have the better your business can be at making profits and cutting costs.