How would you describe your demand environment? How would you define its boundaries?
Managers in business-to-business (B2B) enterprises typically respond to these kinds of questions by referencing a host of familiar business practice models articulated and implemented over the last 20-30 years. According to these practices “demand” involves everything that takes place between you and the customers who buy things from you, while “supply” refers in turn to the mechanics of everything you procure from upstream vendors. Demand is the world of sales & marketing, of pricing and running promotional campaigns and figuring out what products to bundle with others to win a bigger share of the customer’s total market basket. Supply is operations and logistics, inventory cost management and procurement processes. The concept of a “supply chain” has taken firm root over the last decade or so, while demand is seen less as a sequential chain than as a loose collection of activities organized around a point of contact between the enterprise and the collective needs and preferences of the customers who directly buy its products and services. The “art of the sale” is thought to be a less quantifiable notion than the “science of logistics”, with a greater X-factor that does not easily lend itself to data-driven analysis. This is the traditional view – but managers today are faced with a new set of realities that require a different way of looking at the enterprise’s demand environment. Continue reading