U024399L  11pm Wed


  1. Introduction  

Demand chain management can be seen as a further development to the existing supply chain management theory. Demand chain is essentially a concept that focuses more on the market need than on the efficiency of supplying the product.

This concept is becoming more relevant as manufacturers strive to be more competitive by adopting mass customization approach. To do this, manufacturers require information about what the customers want.  This information will be transmitted to the production floor to produce according to customer needs. Due to the fact that customers may not be willing to reveal sensitive information or able to describe their wants in full details for the manufacturers to make timely and effective decision, demand chain management concept remains a challenge to implement. How can a manufacturer make full use of information, be it partial or full information to determine its operations management is the key factor to successful adoption.

        As this is a relatively new research that is being conducted, the research papers are relatively few compared to the rest of the well established concepts in operation management. Nevertheless, the decision to be made in this topic is about who should adopt demand chain management, what are the important factors that will make or break the implementation.

2. Literature Review

2.1 Demand Chain Management (DCM) in manufacturing and services: web-based integration, drivers and performance

This paper researched the relationship between demand and supply chain integration and the benefits that it contributed to a manufacturer and a service provider.

Demand chain management is essentially linking up customers and suppliers of a firm with the firm’s operations. However, this concept did not take off until the internet technology was in place. DCM requires both upstream and downstream integrations among different partners of the firm. In order for this to make economic benefits, the information that is being transmitted has to be cheap, complete information and real time for use in supply chain forecasting, planning, scheduling and execution. Hence one of the key drivers in DCM is web-based technology.

The economic benefits from successful DCM implementation are plenty. As a result of efficient sharing of information right from the customers to the suppliers, this could provide tremendous savings in the supply chain in terms of reduction in inventories, improved logistic communications, the ability to serve the customers better by meeting their demand on time through better forecasting and reduction of non-value added activities.

Despite the benefits, DCM has its flaws as well. One important factor to note when implementing this concept is that distorted information in any path along the supply chain can lead to disastrous consequences such as loss of revenue, poor production planning.

In the author’s work, a strategy matrix (Model A to D) was developed to divide the degree of internet based of integration for demand and supply. For Model A, there was little or no web based integration, model D was at the other end, while Model B integration was with suppliers and Model C with customers. The first set of hypothesis tested showed results that integration has direct relationship with performance of the company for both manufacturer and service provider. Only difference was that service business performance will not be affected by full demand integration (Model D).

The second set of hypothesis obtained results suggesting that the key drivers to demand chain integration were anticipated rational efficiency in supply chain and new markets access. The factors such as external pressure and bandwagon effect played little role.

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        Based on the results of both hypotheses, the results showed that DCM played an important role to manufacturers although this did not apply to service provider. Possible explanation is the diverse category of service businesses available; some needed more inventories than the other. However the most important insight provided was that when upstream pressure to integrate was present, the companies will adopt the integration. Conversely, companies will only integrate downstream if the benefits outweighed the cost. Hence, a manufacturer is likely to implement upstream integration prior to downstream integration.

2.2 Robust Planning: A new paradigm for demand chain planning

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