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(This is an ongoing column in The Journal, which is intended to give a brief view on a potential topic of interest to practitioners of business forecasting. Suggestions on topics that you would like to see covered should be sent via email to [email protected]).
For many years I have felt that the Demand Management (DM) area was not being properly addressed by the business research community, that the DM label was being bandied around too loosely, and that there was confusion about it in industry. People often used the DM label when they talked about demand forecasting. Others used it to signify all the activities involved in generating and shaping customer demand; basically the activities of marketing, merchandizing, and sales managers. In a related way, there appears to be confusion about the difference between demand forecasting and demand planning.
Almost six years ago I attempted to add a little clarity to the DM term by writing a column titled "Demand Management Versus Forecasting" in the Winter 2000-2001 issue of The Journal of Business Forecasting. The article described the differences among demand forecasting, planning, and management. In that article, I defined DM as "making decisions and acting in real time to track, assess, and handle real demand and supply in the context of plans and forecasts." I went further to state that "DM is a process that involves balancing demand and supply between forecasting/planning cycles." I now feel that this is no longer the way to describe this increasingly important set of business processes.
As a member of an academic institution for the past 2-plus years, I've had the luxury of viewing supply chain management without being directly engaged in it-a perspective that offers me the opportunity to "see the forest for the trees" as the saying goes. I recently launched some research initiatives at MIT in DM and started to think once again about defining the term to assess the full scope of the business processes and practices we would need to research. I decided to keep it simple, yet broad, and defined DM to be the "matching of supply and demand over time." Under this definition, the phrase "over time" is important because it not only means at every instance of time...