Unlocking Market Potential: The Shift from Supply-Driven to Market-Driven Demand Planning
Market-driven systems are better than supply-driven systems because:
– They allow for competition, which can lead to lower prices and better products
– Companies in a market-driven system must innovate and improve their products to attract customers
– They are more responsive to changes in consumer preferences
Supply-driven systems are not as good as market-driven systems because:
– They can lead to overproduction of goods and services that are not in high demand
– Companies in a supply-driven system do not have the same incentives to innovate
– They prioritize supplier interests over consumer interests
Which one are you?
Demand planning systems help companies predict what people will want to buy.
But the goal of these systems has changed and most companies haven’t caught up.
Systems are still based on old information, like past orders.
Instead of what the market is telling us people want to buy.
This means that demand signals are coming from the company’s supply, not from the market.
Most companies don’t even realize this is a problem.
Let’s take an example:
Imagine a company that makes beach umbrellas.
They’ve been in business for a while and have a reliable demand planning system in place.
This system looks at past orders for beach umbrellas.
Then uses that information to predict how many umbrellas they should make in the future.
But, one year, there is a sudden increase in demand for beach umbrellas because of a heat wave.
The demand planning system doesn’t pick up on this shift in demand. Because it is only looking at past orders, not real-time market signals.
As a result, the Company doesn’t make enough umbrellas to meet the increased demand. The company misses out on potential profits.
In this example, the demand planning system was “supply-driven”. It was based on the company’s supply (past orders).
Instead, it should have been “market-driven”. It should have taken into account real-time market signals.