1. DEMAND-CHAIN
MANAGEMENT
PRESENTED BY:-
BHUBNESHWAR PANDAYA

2. Critical questions
• What is Demand Chain Management?
• How does it differ from traditional Supply
Chain Management?
• Who does Demand Chain Management
Impact?
• How does it improve the procurement and
payment processes?
• Why the shift?

3. What is Demand Chain Management?
• According to D. Ericsson D.C.M. is a natural next step in
the evolution of the Supply Chain Management concept
based on the necessity for adaption to changing external
and internal conditions and the availability of new tools.
• Demand Chain Management is a shift in procurement
strategy from a stance of reactive to proactive.
• It is a shift from processing paperwork to proactively
negotiating strategic agreements on behalf of the
organization in anticipation of needs based on feedback
from users, historic data, organizational data.
• It is about developing strong working relationships with
end users, Logistics staff, Accounts Payable staff, and
Suppliers to ensure that organizational needs are met on a
cost effective, timely basis.

4. ..
It involves
• Customer relationship management
• Extended supply chain management

5. Philosophy Shift
• Demand Chain Management is about
breaking down the barriers via a philosophy
shift from a “silo” driven, territorial, “not my
department” approach to one of a holistic,
strategic, solution driven philosophy.
• How is this achieved?.......Through
partnerships. It is all about garnering trust,
following through, and being creative in
breaking down existing barriers.

6. How is this achieved?
• Get out there! Go visit your users and the individuals you are
buying for. See their work environment, the limitations they
face, meet with them regularly to follow up on issues, resolution,
future needs.
• Listen. Your users and partner areas such as Accounts Payable,
Central Distribution, Warehousing, as well as Suppliers can
provide you with a wealth of information, if you let them.
• Be creative. Look for creative, strategic solutions to potential
problems, talk with the users and get feedback, think outside of
the norm. Don’t be afraid to do things differently than they
have always been done.
• Partner and Network with your end users, your counterparts in
Accounts Payable, Central Distribution, Warehousing and in
your supply network, build relationships based upon mutual
understandings and common goals.

7. Demand Chain Management v.
Supply Chain Management
• The primary difference between demand chain
management and supply chain management is the driver.
The focus is moved from a transactional approach to a
strategic approach.
• Rather than being in a reactive mode of responding to a
request, Demand Chain Management is about working
with people upstream and downstream to find the best
means for meeting the organization’s needs on a strategic
basis.
• Demand Chain Management is all about collaboration and
information sharing, which is often not easy in today’s
world where people are often expected to produce optimal
results with limited resources.
• Demand Chain Management often results in process and
cost savings to the organization as well as improved
relations across units.

8. Who does Demand Chain
Management Impact?
• Typically everyone along the procurement/distribution/payment
continuum.
• Ideally the impact is positive for all parties and can include:
greater understanding of organizational needs, a better process
for the user, buyer, supplier, accounts payable staff; improved
communication and improved responsiveness. All of this should
result in reduced costs to the organization.

9. Who does Demand Chain
Management Impact?
• For the User, they have the benefit of a Procurement specialist
who is intimately familiar with their needs and their organization
who can negotiate a better contract on their behalf.
• For The Procurement Individual, it results in a reduction in
transactional business and allows them time to develop better
contracts, to improve on existing contracts, and is a shift from
processing purchase orders to managing their resultant strategic
contracts on behalf of the organization.
• For the Supplier, it increases their ability to meet their
contractual requirements as the increased communication both
upstream and downstream should result in clearer product
specifications, a clearer understanding of performance
requirements, and in many cases a shorter payment cycle.

10. Who does Demand Chain Management
Impact?
• For Warehousing, Distribution and Logistics staff,
depending upon the contract it can result in an increased need for
warehousing and logistics management or a reduced need as in
the case of direct-delivery contracts.
• For Accounts Payable Individuals, it can result in improved
methods for payment such as consolidated monthly billing thus
reducing the number of invoices handled monthly; an evaluated
receipts process where the signed, received packing slip serves a
dual function as both the proof of delivery and is a means for
issuing payment thus reducing the number of incoming invoices
and streamlining the payment process; or a sub-voucher process
for automated payments that are a regular amount, issued
regularly over the course of the contract; ACH/EFT payments;
procurement card utilization.

11. Why Make the Shift?
• Shrinking resources in today’s economy makes
collaboration and knowledge sharing a necessity.
• We live in a world that is more complex than in the
past by merit of the new global economy.
• Savings to be gained: measured in both
bid/negotiated savings and in efficiencies or
process savings.
• …………………………………It just makes sense.

12. Demand Chain Process Improvements
Sub-Voucher Process
• “Sub Vouchers”: this is a payment process in which the
supplier is paid a consistent amount on a regular basis over the
life of the contract.
• Trigger: same amount invoiced monthly
• Action: the system is set up so that payment is automatically
issued on a monthly basis for the agreed upon amount. Works
well for property leases, equipment rentals, equipment leases.
Any situation where the amount paid is always the same over the
life of the contract.
• Result: the system automatically generates the payment without
additional intervention other than either distribution of charges
or reconciliation on the back end. Payment occurs with minimal
use of resources and on-time.
• Involved Parties: User unit, Purchasing, Accounts Payable,
Supplier, Systems

13. COMPETITIVE ADVANTAGE
Companies have to deal with three condisions:
• Alignment ( create shared incentives)
• Agility (respond quickly to short –term
change)
• Adaptability (adjust design of supply chain)

14. Demand Chain Process Improvements
Evaluated Receipts
• Evaluated Receipts: a system in which a supplier is paid based on
submittal of a signed, received packing slip and existing contract with
line item pricing.
• Trigger: contract with line item pricing and repetitive purchases
• Action: the staff receive the goods into the system, the system is set
up to prompt generation of payment based on what was received at
the contracted price and payment is issued directly based on
receiving with no invoice generation by the supplier and minimal
accounts payable interaction.
• Result: use of fewer resources resulting from reduced invoice
generation for the supplier and invoice handling by Accounts
Payable. Payment is issued for what is received and the contracted
price is always paid, ensuring overpayment does not occur. With
technology the process can be as automated as the buyer would like.
• Involved Parties: Supplier, Receiving, Accounts Payable,
Purchasing, Systems

15. Demand Chain Process Improvements
Consolidated Monthly Summary Billing
• Consolidated Monthly Billing: rather than individual invoices, the
supplier submits either electronically or in hard copy a monthly
consolidated invoice of all activity.
• Trigger: contracted pricing, high activity level, multiple delivery
addresses, multiple ordering entities under a single contract.
• Action: the contracted pricing is loaded into the system or maintained in
a database where it can be extracted from or “hit up against” when
invoicing is submitted. The supplier is required to submit pricing in a
designated format that contains all of the necessary data to confirm
pricing and delivery. A consolidated invoice is submitted by the supplier
once monthly and audited against contracted pricing. Payment is made
monthly based on the result of the invoice audit (this can be a manual
process or automated).
• Result: significant reduction in invoice volume resulting in better use of
resources, process can be automated for verifying pricing.
• Involved Parties: Accounts Payable, Systems, Purchasing, Supplier

16. Demand Chain Process Improvements
ACH payments
• ACH/EFT Payments/Wire Transfers: these are automated on-line
payments made directly to the supplier’s bank account.
• Trigger: contract that requires automated payment to the supplier or
where wire transfer is required. Works well for international transactions.
• Action: when purchase order is set up the payment mechanism must be
identified as ACH or Wire Transfer and the appropriate banking
information must be identified for Accounts Payable. Upon receipt of
an invoice, Accounts Payable sets up the payment to occur via ACH or
wire transfer according to current banking rules for processing of E-
commerce Payments or Business to Business Transactions.
• Result: payment occurs more rapidly, can be readily identified by the
supplier. For items requiring pre-payment this can often work well as an
efficient means for payment. For international purchases it is an
excellent choice as the payment can be verified as received by both the
originator and receiver.
• Involved Parties: Purchasing, Accounts Payable, Systems, Banking
Institution and possibly other financial departments in the organization.

17. Demand Chain Process Improvements
Procurement related Improvements
• Alignment with key units to provide higher level of
service
• Contracting efforts should be aligned with user needs
and over-arching organizational needs
• Procurement efforts should be structured in such a way
that the results include measureable improvements in
process or pricing

18. ……………….
Questions & Answers