If you take your business or learning about business seriously you have by now encountered the term and ideology of supply chain management. Demand chain management is the forgotten sister as it were of supply chain management. It’s not that people in business don’t practice it but many don’t know they are practising it. So what is this demand chain management, what does it involve and why should it matter to you?
Build it and they will come…maybe
We’ve all heard the saying “build it and they will come”. This concerning business says that if we create the good or service the customers will come. Perhaps. but we have many stories where that has not been the case. And while this applies in varying degrees to all businesses the gap between “them” (customers) and the thing you have built is demand chain management.
Demand Chain Management
The demand chain is concerned with all the activities a firm undertakes to generate the demand for its goods and services, so it includes marketing, sales and service. Think about it this way, that product you want to buy next, how did you come to know about it? What made you want it? How are you going to get it? That is demand chain management in action. The role of demand chain management is to stimulate downstream demand for whatever you’re offering. There is a lot of nuance as businesses are different but I think we can draw a brilliant example from the fashion industry.
You may have noticed an abundance of women’s clothing in the colours yellow, pink and orange in 2021. You may have also noticed this mysteriously corresponded with seeing your favourite influencers and even spreads in magazines featuring those colours. You can add to that catwalks, videos and many other outlets featuring women in those colours. How did this happen? Well, the creators, the fashion designers influence the magazines with their exclusives for the coming season/year. They do their fashion shows and such featuring these colours. This fashion show attention trickles down to smaller manufacturers and mass producers. The colours can vary in shade but you will see they generally follow this palate. The retailers then push these colours in their advertising. They dress celebrities and influencers in these colours. And you happen that dress in the colour your favourite personality was wearing. Demand chain management. The fashion industry is not alone in this behaviour but their case is easy to understand.
The goal of a business is to create customers
The goal of any business is to create customers (demand) for what it offers. That’s the activity of demand chain management. If you have a new or unheard of product you will understand this very well. Customers don’t know what they don’t know. That includes not knowing they want a product they don’t know about. It is your responsibility to conscientise them about the product while educating them on why they want it. If you are a new entrant in an existing market it may not be so obvious to you as people know the product well. The question your demand chain management must answer “is why do they want it from you”? They are likely already getting the product from somewhere else so what will make you the choice?
As mentioned before there are three areas in demand chain management marketing, sales and service.
Your marketing should be geared towards helping people understand your product, the need for it as well as who you are. This is very much about creating awareness and involves activities such as education, awareness, some onboarding. Marketing is letting them know you exist and why they should care. Social media and the internet have made marketing a two-way street more than ever before. It’s not just about telling the world what you have but also about listening to what they want.
While sales and marketing are normally lumped into one thing the two are distinct functions that serve different purposes but with the same end goal. In fact, when done right the two should be almost seamless. To make the distinction clear sales is all about facilitating the transfer of the product to the customer and the money from the customer to the business. You need to consider how customer friendly the process is.
Service spans both sales and marketing activities and extends to after-sales. What happens when customers have questions for you? What happens when customers have questions but they don’t know to bring them to you? What happens when customers need help in the decision making process? There’s a lot to think about here.
The goal of demand chain management is to look at these activities and arrange them into one cohesive plan rather than have them as separate elements.