Demand driven supply chain planning basically refers to the proactive determination and control of requirements, which is then associated with the establishment of corresponding plans that will meet these requirements. A demand driven supply chain generally is formed by a collaboration among a number of suppliers in the supply chain. Each supplier in the supply chain contributes towards fulfilling the overall goal of the overall demand and provides inputs to the process of demand fulfillment.

A supply chain is defined as a group of producers that cooperate to meet the demand of a marketplace. In essence, it can be described as a set of people and/or machines that are coordinated to meet the end users' requirements. For instance, in the food industry, the food food-processing stage includes the manufacturers, middlemen such as processors, brokers, truckers, and storage facility owners, distributors, and consumers. Under the heading of demand planning, the collaboration among these different participants in the supply chain takes place.

The term "demand planning" can refer to several things. For instance, it can mean determining what resources are needed to meet the demand of customers in the current market. It can also refer to determining what new resources might become available for use in meeting future demand. Lastly, demand planning can refer to aligning all of the processes of production and distribution so that a single source of raw materials or a single source of finished goods is available at any time. In this article, we discuss the theory and practical implementation of demand-driven supply chain planning.

There are two primary theories on the basis of demand planning: demand determination and demand elasticity. Under the demand determination theory, a company makes decisions about what resources to invest in depending on the amount of demand that it currently faces in the market. Under the demand elasticity theory, a company only decides to invest in a particular asset when demand for that asset increases to a level above or beyond a predetermined level. These theories provide the framework for determining what resources a company should invest in to satisfy its customers' demands. Both theories are important to a company's ability to meet its customers' demands.

Supply chain management has come to be seen as an essential part of the manufacturing process. This process identifies the relationships among producers and distributors, as well as between the two and the customer. Supply chain management seeks to maximize the throughput of raw materials, and reduce the cost of production by improving the chain's efficiency through the use of resources such as factories, warehousing centers, and shipping facilities.

One of the primary ways that a company manages its supply chain is by identifying bottlenecks in the process and developing plans to address those problems. Bottlenecks occur when supply is lower than demand. A common problem is identified when supply is too low because of a temporary drop in demand caused by weather conditions or other external factors. In the process of eliminating bottlenecks, plans are developed to improve production efficiency.

Another way that demand determines the size of a company is by determining demand growth. When demand increases at a faster rate than supply, a surplus is created. This surplus is then sold to other customers if the costs of production are less than the profits of the sale. If demand decreases at a slower rate than supply, a deficit is created, and production stops.

There are many possible applications of demand and supply theories. For instance, a car manufacturer might use demand to determine whether to make an additional car model after launching the first model in the market. Likewise, a computer manufacturer might analyze demand to determine if the demand for a particular program will produce enough profits to justify the investment needed to produce it. However, applying these theories to business decisions is most often applied to manufacturing decisions.

For more details about demand driven supply chain planning: or Join supply chain webinars: