I was on a call yesterday with a manufacturer and one of the urgent needs that surfaced was being able to respond immediately to reduced or cancelled demand. We’ve heard this before but this was an interesting take on the demand management situation.

If you get a new demand, it is very exciting! People are engaged and working to get that demand out the door. When the customer cancels an order or reduces forecast, that is very deflating. Many times, the depressed customer service representative (CSR) removes the order and that’s the end of it. The problem is the business has already invested in demand by building at some level to forecast, making commitments to suppliers or executing on pull based replenishment based on what is now out-dated demand. The business does not feel the pain until the end of the quarter when there is a bunch of excess inventory on the books. Sometimes the pain (or challenges) of a new customer order is like getting punched in the stomach, you feel it immediately. With a drop in demand it can be like a clogged artery, you don’t feel the pain until it’s too late.

The other analogy we heard was that of a rock climber. When an experienced rock climber scales up a mountain, they use proper technique and top end tools. They don’t leave the technique and tools at the top of the mountain when it’s time to scale down. An alert to an new customer order so everyone can respond profitably is just as important to an alert to a drop in demand so all participants can immediately collaborate to reduce and avoid costs.

I’m sure there are many other examples of how to respond effectively in a downward market but people are starting to realize that responding in time is just as important in a recession as it is in better times.

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Tags: Demand management
Posted in Demand management
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