Chasing demand strategies
Organizations often pursue a number of strategies to meet the drastic changes in demand and customer preferences. Chasing demand strategies can help firms strive and capture immediate and changing customer needs, create scale and breadth of product lines, and reduce operational costs. There are many forms of chasing demand strategies, such as batch size reduction, shortening cycle times, inventory differentiation, production customization, vendor managed inventories, value chain optimization, and postponement.
Batch size reduction is an effective strategy for companies to bring down production costs with smaller order sizes. This approach reduces the number of products made in batches, making it easier for firms to respond quickly to fluctuating customer demand. With smaller batches, there is also less pressure to keep up with larger orders, which can result in an overall reduction in production costs. As well, smaller batch sizes allow for faster customization, more efficient inventory tracking and management, and more accurate product delivery.
Shortening the cycle time is another chase demand strategy. A shortened cycle time reduces the time it takes to make and deliver products, allowing firms to meet customer needs in a timely manner. Shortened cycle times lead to faster product turnarounds and fewer missed customer opportunities, increasing customer satisfaction. Additionally, by speeding up the production processes, firms can save on overhead, labor, and inventory costs.
Inventory differentiation is another chasing demand strategy. This approach involves differentiating inventory levels throughout the supply chain to meet changing customer needs, as well as adjust for different levels of customer demand. By identifying the needs of customers and their region, firms can important inventory at the best time and from the most efficient source. This approach helps optimize inventory levels and cut costs.
Production customizations, such as third party manufacturing, is another chasing demand strategy. Customizing production processes means products can be made to order, made faster, and made according to customers’ requirements. The advantage of this approach is that it allows for quick changes to be made, as well as flexibility in pricing.
Vendor managed inventories are yet another way organizations can chase demand and improve efficiency. This approach involves leveraging information from customer orders to manage the flow of inventory. This allows vendors and manufacturers to better assess customer needs and create better stock control, helping to save on expenses and generate more profit.
Value chain optimization is an effective chasing demand strategy that combines a number of the strategies outlined above. By optimizing the supply chain, firms can reduce costs, improve customer service, and create a smoother production process. This approach helps firms identify production costs, identify waste, and create effective new procurement processes. Additionally, value chain optimization can help improve logistics, customer service, and increase overall efficiency.
Lastly, postponement is a chasing demand strategy that focuses on delaying the final production and assembly of products until the demand is known. This approach saves costs by avoiding premature production and allows firms to customize products on-demand. Furthermore, it can help reduce inventory levels as well as facilitate rapid adaptation to changing customer needs.
Chasing demand strategies are an effective way for firms to gain an advantage in their industry. By leveraging different strategies, organizations can save money and capture customer needs, helping them to remain agile and competitive. Additionally, these strategies can help firms create scale, differentiate their products, and adapt quickly to changing customer needs.
