What is the role of demand planning in Logistics?



Demand Management/Planning is the function of recognizing all demands for goods
and services to support market place. An adequate demand management facilitates
the planning and use of resources for profitable business results.
It has an important role in Logistics, because through the demand planning, specially
using the forecasting they can realized about the demand of the company. That implies
really good changes:
1. Increasing Customers’ Satisfaction: the main objective of a business is to
satisfy its customers and thanks to the forecasting the company will be able to
predict the product demand.
2. Reducing Inventory Stockout: businesses don’t want stocks in the warehouses
for a long time because it implies more money.
3. Scheduling Production more Effectively: if the company follows some steps in
order to create a more organized production, it will increase the effectiveness
of the company.
4. Lowering Safety Stocks Requirements: thanks to the demand forecasting, the
company can plan the inventory levels.
5. Reducing Product Obsolescence Costs: the volume of obsolete inventory will
be reduced and consequently the direct and indirect costs of keeping them in
the warehouses.
6. Managing Shipping Better: logistics has a narrow relationship with demand
management, so all steps related with it like shipping are going to be better
7. Improving Pricing and Promotion Management: price changes have an impact
on revenues. In this case, it means a positive effect.
8. Negotiating Superior Terms with the Suppliers: it’s better to have a long-term
relationship with your supplier.
9. Plan Sales Strategies: obviously, this technique is really useful for sales
decisions as promotions, pricing and purchasing.


Examples of demand management in a business with a large product portfolio.

Many companies have just realized that they have to manage the demand in a dynamic way in order to achieve clears objectives: increase customer satisfaction, maintain high level of profitability and fit the demand with the supply. A clear example of demand management in a business with a large product portfolio is Disney. The company has implemented A clear example of demand management in a business with a large product portfolio is Disney. The company has implemented different techniques in demand management combining careful research, creative insight and technology in order to maximize customer enjoyment and satisfaction and at the same time they are able to fit their demand with the supply.

A clear example of this strategies is the study Disney has done in order to know how long people wait in line before the rides. Thanks to this study, the company can determine how to capture customers’ attention with Disney’s characters, videos, mirrors or other things.




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