ABSTRACT
Defi ne demand management ◾ Discuss the importance of demand management ◾ Identify the challenges in merging supply and demand into a management ◾ process Contrast demand management approaches in manufacturing and service ◾ industries Describe the four strategies a business can use to manage demand ◾ Identify the factors that aff ect the selection of a demand management strategy ◾ Describe a model that integrates demand and supply management ◾ Provide examples of the four demand management strategies ◾
Introduction Th e onset of global competition has severely impacted American manufacturing in that customers have developed an increased expectation, of what makes up satisfactory quality, price, and service. Th is same trend is appearing in many service industries, as international competition is becoming more evident in retailing, airline travel, tourism, banking, and real estate. As competition increases, and customer expectations rise, the need to manage demand becomes more important. To put it simply, the future of many manufacturers may depend on how well they integrate their product off erings with their service package. Th is strategy requires companies
to provide a complete goods-service package that can be customized, in both time and content, for individual customers.1,2
Both manufacturing and service industry managers recognize the need for eff ective demand management. Manufacturing companies often use inventory as a buff er to compensate for demand fl uctuations while satisfying their desire to maintain a constant level of production. Demand management has also been a matter of concern in service industries, where perishability of the service may often preclude the use of inventory, thereby requiring a much closer matching of demand and supply capacity.
