Supply And Demand: How They Are Managed In The Digital Age
Posted on: 26 May 2019
Supply and demand; in economics, these topics are the basis for almost every economy and the purpose for the existence of every business. It used to be that if demand rose for a product, supply was expected to keep up. If demand fell, then supply should slow down or stop before too much product began to accumulate.
Take the Cabbage Patch dolls in the '80s as an example. Their creator had no idea there would be such a huge demand for this product. Supply could not keep up with demand, and no store could get enough of the dolls on the shelves. Really, the lack of supply definitely benefited the company because prices skyrocketed as more dolls were produced to try and meet demand. Within a few short years, public interest dwindled, and supply kept rising while the demand for the toy fell. Prices fell too, and the company lost money.
Their biggest problem was that they could not predict the need/demand and therefore could not keep up the supply or decrease it. In the modern digital age, there is demand planning software available from companies like Enhanced Retail Solutions. Here is how it helps manage supply and demand to avoid mistakes like this company.
The Software Tracks Marketing Trends
The data you enter for sales gives the software enough info to track marketing trends. If there seems to be a dip occurring, you can slow down production just enough to not overproduce or over-manufacture products. If a slight rise occurs, you can watch it to see if the demand will continue to go up, or if it was just a short spike in sales. If demand does continue to rise, you can get production to rise to meet the growing demand again. By tracking the marketing trends, you can be assured that your company will neither produce too much product nor produce too little.
The Software Also Tracks "Hot Spots"
There are places where your products are selling out much faster than others. These are referred to as "hot spots," and the demand planning software can help you track these, too. The more product you ship out to certain areas, the more likely these spots are "hot" for the sales of the product you send. Keeping that in mind will be your lifeline if and when sales dip so drastically that you have a little too much product. Then you can send the extra product to sell in the "hot spots."
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