Supply Chain and Demand Model
Michael Alberd, Sean Parrett, Patrice Watkins, Anndrea Barr
March 30, 2015
Supply Chain and Demand Model
Supply chains and demand chains have different purposes but are similar in that they both need to work very closely together in order to be successful. Stakeholders need to possess a way to see what consumers will want to purchase and how much they will pay for it in the future. Stakeholders can be provided with a projection of information needed to be successful in the future by comparing and contrasting real-time models of supply and demand chains. These models are alike in the fact that they are both used to predict the future of consumer's wants and needs.
What is Supply Chain and how does it work?
"A Supply Chain is an integrated process where raw materials are manufactured into final products, then delivered to customers (via distribution, retail, or both)" (Beamon, 1999). The supply chain encompasses three functions; the provision of materials to a manufacturer, the manufacturing process and distribution of the final goods through a network of distributors and retailers to the customer ("Canadian Supply Chain Sector Council", 2015). The companies and organizations involved in any of the three functions of this process are linked to each other through a supply chain. To assist in the flow of products, information is shared between the companies and organizations (supplier to customer) in the supply chain to integrate and coordinate activities to meet the current and future needs ("Canadian Supply Chain Sector Council", 2015).
Describe what the Supply and Demand Model is and how it works The supply and demand model is information that shows the demand side (buyer's preferences) and the supply side (seller's preferences) of the market, which then helps determine market prices and production quantities. Supply and demand model applies to competitive markets only, which are markets that not only have many buyers and sellers, but they also want to buy and sell similar products. When reviewing a supply and demand model the point where supply and demand come together is what prices and quantities are determined by. Also, it is important for one to remember that quantities and prices are the output of supply and demand.
How the supply and demand models work together
The supply chain consists of all of the processes that are needed to fulfill a customer's need accomplished with supply chain management. Given regular supply lead times, suppliers typically deliver enough to take care of the client's demand forecast. However, as noted by Heikkilä (2002), "The crucial question for a supplier is how to design the demand chain architecture according to the needs and characteristics of distinct customer needs and situations" (p. 761). To meet fluctuations in demand, suppliers develop an environment that identifies and responds to the altering needs of customers. So once actual demand is known, supply levels are adjusted across the supply chain.
In conclusion, the supply chain and demand model is another tool that businesses can use in order to forecast future business. When a company puts together the information, then they can predict how much of a product needs to be supplied in order to keep up with the demand. This is useful in the sense that the company never has to worry about running out of their product and needing to borrow money from a lender in order to keep up with the needs of the customers. When a company uses the supply chain and demand model correctly, then they can determine if and when they can fluctuate the prices of their goods to meet the money supply at that given time.
About Education. (2015). Retrieved from www.about.com
Beamon, B. M. (1999). Measuring supply chain performance. International Journal of Operations & Production Management, 19(3), 275-292....
References: About Education. (2015). Retrieved from www.about.com
Beamon, B. M. (1999). Measuring supply chain performance. International Journal of Operations & Production Management, 19(3), 275-292. Retrieved from http://search.proquest.com/docview/232361874?accountid=35812
Canadian Supply Chain Sector Council. (2015). Retrieved from http://www.supplychaincanada.org/en/supply-chain
Heikkilä, J. (2002, November). From supply to demand chain management: efficiency and customer satisfaction. Journal of Operations Management, 20(6), 747–767. doi:http://dx.doi.org/10.1016/S0272-6963(02)00038-4.
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