Demand-Driven Strategies

The demand-driven strategies were first developed to understand the impact of inactivity and collection, as information fertilizes the supply chain from the source of demand to the suppliers.

Within a mentioned supply lead time, normally the manufacturers manufacture sufficient goods to satisfy the needs of their clients predicted. But this is only somewhat accurate at the granular level at which inventory decisions are made.

Anyways, when the actual demand varies from the demand predicted, the first thing to be done is to adjust the supply levels needed in accordance with each step of the supply chain. But because of time delay between changing demands and its detection at several at points along the supply chain, its impact is amplified, resulting in inventory shortages or excesses.

The inventory levels of the companies are disturbed because of the overcompensation done by the companies either by slowing down or speeding up production. These fluctuations prove to be a costly and inefficient affair for all participants.

Basically, the demand-driven strategies or the demand-driven supply chain is completely based on the demand as well as the supply part of marketing. So it can be uniquely organized in terms of the demand side and supply side initiatives.

The demand-side initiatives concentrate on efficient methods to acquire the demand signal closer to the source, observe the demand to sense the latest and most accurate demand signal and shape the demand by implementing and following promotional and pricing strategies to gear up demand in accordance with business objectives.

On the other hand, the supply side initiatives mostly need to do with reducing reliance on the prediction by developing into an agile supply chain accompanied by faster response when absolute demand is known.

All the strategies discussed above are addressed under the demand-driven strategy, but we a company following all of them is rare. In fact, we can conclude that companies concentrate on different markets on the basis of features of the market and industry.