Demand management: Process, steps, and best practices
Summary
Have you ever felt overwhelmed by unexpected customer requests or struggled to keep up with orders? If you don’t know how much demand there is for your product, it can lead to stress and even harm your business if you can’t respond quickly.
Demand management lets you use past data and current trends to predict and plan for what customers want. This helps keep customers happy because they get what they need without asking. In this guide, we’ll explain why demand management matters, how to use it, and if it’s right for your team.
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What is demand management?
Demand management means forecasting, planning, and meeting customer demand. It links what your customers want with how you deliver it, helping you avoid bottlenecks and keep your supply chain working well.
In manufacturing, demand management typically happens after supply chain management (when you manage procurement and suppliers) but before portfolio management. Demand management is highly cross-functional, bridging the gap between:
Consumer demand
Supply teams
Inventory
Marketing
Customer service
Demand management example
Here's an example. Let's say you've identified that, on average, women's clothing doesn't have usable pockets. Memes go viral, and people complain, but that alone doesn't confirm demand; at this stage, it's just hearsay.
To check if there is real demand, retailers can use demand management to collect data and see if people actually want clothes with pockets. If they find demand, they can make a plan that includes:
Connecting with supply companies
Coordinating with the design team
Relaying information to manufacturing departments
Who uses demand management?
Many different departments and roles use demand management, including:
Marketing and sales: Align campaigns with projected customer interest
Operations and supply chain: Coordinate production and logistics
Finance: Apply demand insights to budgeting and resource allocation
Product management: Prioritize features and launches
No matter if you work in manufacturing, retail, or services, demand management helps your business focus on meeting customer needs.
Why do you need demand management?
Why should you know what your customers want? Demand management helps you see what will sell and lets you plan how to make those products. Whether you provide services or make products, demand management can help you:
Boost customer satisfaction. Ensure customers get what they actually want (not what you think they want).
Reduce potential bottlenecks. Connect with procurement teams to be sure they can react to projected demand and plan accordingly.
Shape your operations. Demand management strategies can help you shape operations to meet customer demand sustainably.
Reduce costs and waste. When you have a better understanding of what customers need, you can improve cost management, adjust pricing, and manage manufacturing accordingly.
Boost operational efficiency. In planning demand, you can identify gaps and plan for potential challenges.
Demand management vs. related concepts
People often mix up demand management with similar processes. Knowing the differences helps you choose the right method when you need it.
Concept | Focus | Relationship to demand management |
Demand planning | Forecasting future demand using past data | A subset of demand management |
Capacity planning | Ensuring resources meet projected demand | Works in tandem with demand management |
Demand generation | Creating demand through marketing | Planning ahead vs. reactive approach |
Demand management vs. demand planning
Demand planning is one part of demand management. It involves looking at past data to predict where demand is headed. This might mean reviewing sales over certain periods or spotting consumer trends.
Demand management vs. capacity planning
Capacity planning works in tandem with demand management to coordinate the business resources required to meet projected demand. Demand management determines what the demand is, and capacity planning ensures you have the resources available to meet it.
Demand management vs. demand generation
Demand management is about understanding what people want and how to provide it. Demand generation, on the other hand, is a marketing approach that tries to create more demand for a product or service. You can think of demand management as responding to demand, while demand generation is about creating it.
Steps of the demand management process
The main goal of demand management is to understand the market and demand chain, then build a strategy to meet those needs. After setting your demand strategies, you can create project portfolios and use portfolio management to carry them out.
Here's how the process works:
1. Review past data
Look at past performance data to find out what your customers liked most in recent months and years. Check which products did better than expected and what made them successful. Also, review what didn’t do well and decide if you should improve or stop offering those products or services.
2. Analyze the current market
Understand what's happening right now by reviewing current market conditions and trends. Look at your competitive advantage (or lack thereof) to see how you stand up against similar products and services in your industry. Collect and analyze data on your competitors, what's happening in the world at large, and relevant trends so you can make a data-driven decision about what to do next.
3. Estimate demand
Use the data you collected in the previous steps to estimate future customer demand with a sales forecast template. This is demand forecasting, and it's how you can make informed decisions about what to produce, when, and for whom. These estimations will then form the basis of your strategies.
4. Develop demand strategies
Use your forecasting and data to create a demand strategy and action plan. This is where you brainstorm ways to apply the knowledge you've gathered, then develop a plan to incorporate it into day-to-day operations.
5. Incorporate into business planning
Demand management is intended to support the project and portfolio planning process. It serves as a prioritizing guide, showing you what to focus on in your upcoming work. From demand management, you'll create initiatives and target outputs that will affect customers in real time.
6. Coordinate with supply planning
After you know the demand for a product or service, plan how to meet it. Work with your procurement team to make sure you can get the supplies you need. By planning ahead, you can spot possible supply chain problems and find solutions before they happen.
7. Optimize your process
Once the demand management lifecycle is complete, start again with a focus on optimization. Ask how you can improve your process to better serve your business. Your approach should evolve as your needs change.
Demand management best practices
A few best practices can make a big difference in demand management:
Know who your ideal customer is. If you don't know them, you can't market to them or know what they want.
Automate your processes. Automation reduces the amount of time you spend on repetitive tasks. For example, you can automate sales tracking and reporting to quickly collect data on past and current demand.
Use systems built for cross-collaboration. Demand management is hugely cross-collaborative. For it to be effective, you need to have systems in place that actively promote this kind of collaboration. Tools like project management software can help you coordinate your work across teams, organize your demand management tasks and processes, and help you build the ideal project portfolio management system.
Challenges with demand management
Supply vs. demand: Supply chain issues can impede demand management and are sometimes beyond your control. Creating a change management plan can help you quickly course-correct, potentially saving you from negative effects if you hit roadblocks with the supply chain.
Forecasting is still just a guess: Even though it's an educated one, it is still an estimation process, which makes it somewhat risky. If things don't go as planned, you might face additional costs or issues. To mitigate that risk, try to plan for multiple scenarios and always incorporate data into your forecasting process.
Siloed teams: If you don't have the proper tools and cross-functional systems in place, you'll spend a lot of time running from team to team to gather the information you need. Using collaboration tools, such as project management software, can help you stay connected with stakeholders throughout the demand management process.
Implementation: You need your leadership and colleagues'buy-in for demand management to work. Once you gather data and create a plan, you'll need others to implement it, or it won't be as effective. To ensure they're on board, use project plans to outline exactly how your demand management system works and why it's so important. This helps you show leadership the value of your work, so they're willing to invest in it before you start.
Manage customer demand with Asana
Understanding customer demand is key to building a successful business. With clear processes and guidelines, you can set up a demand management system that helps you connect better with your customers.
Asana helps teams coordinate work across departments, so you can bring together sales, marketing, operations, and supply chain teams in one place. With features such as workflow automation, real-time reporting, and project portfolio management, you can streamline your demand management process and respond to customer needs more quickly.
Get started today to see how Asana can help you manage demand with clarity and confidence.
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