Tips for Shaping Demand to Available, Profitable Products
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Mary Vasile: Hi, everyone. Welcome to Three Minutes in the Loop, the bite sized video series where you can stock up on the latest supply chain insights, strategies, and news in the time it takes to get your caffeine fix. I’m your host, Mary Vasile. And today we’re covering Tips for Shaping Demand to Available, Profitable Products. Our special guest is Andy Harris, Solutions Engineer here at ToolsGroup. Andy, welcome to Three Minutes in the Loop.
Andy Harris: Yeah, absolutely. Thank you for having me.
Mary Vasile: We’re glad you’re here. So now demand planning. Demand planning is a tricky proposition for businesses due to continued supply chain disruption. But you’re tackling the problem from a different angle by proposing to shape demand to available products. Walk us through that idea.
Andy Harris: Sure. We really see demand shaping being used all around us. A couple of quick examples: Black Friday and Cyber Monday, two very well-known examples. But these are just businesses running promotions; price changes, and so on to entice or direct customers to purchase specific items. So, they’re literally shaping demand.
Andy Harris: And the reason that we see these happen year over year is because businesses are reaping huge benefits. That could be increased revenue, reduced inventory, or a combination of both. And especially today, demand shaping is a good way to overcome some of these ongoing supply chain challenges were experiencing, or at least hedge against them.
Mary Vasile: Okay, so let’s dig a little deeper. How should companies go about shaping demand for items that they already have in stock, and turn a profit?
Andy Harris: Well, one of the ways to accomplish this is what we already mentioned, lowering prices. That’s obviously going to increase demand. Another way that businesses can shape demand is by either increasing or decreasing availability; essentially supply and demand principles. By reducing the actual distribution in certain outlets, they’re essentially creating scarcity and they can boost demand or the price even.
Andy Harris: An additional tip is expanding markets, and this could be introducing product variations. It could be something as simple as new packaging, new messaging, or actual new products.
Mary Vasile: Okay, so let’s assume businesses have done that. How then do they know if their demand shaping strategies are working?
Andy Harris: Well, companies need to look at the overall impact, and that’s an important piece of the equation. But really, there are different components to this. Businesses can make on-the-fly calculations to show that impact, such as price increases, promotions, purchasing requirements, and so on.
Andy Harris: Another way to measure impact is to start and continually do this—compare and create scenarios. So ultimately, organization can reach a consensus. And that’s a good way to give them foresight into the impacts of these shaping activities.
Andy Harris: A crucial piece we don’t want to forget is the alignment of supply and demand. When these two are out of sync, that’s when you’re going to face excess inventory problems or the opposite, come up short and start losing sales.
Andy Harris: One final tip is this. Supply and demand really need to be aligned and to truly be successful with demand shaping, companies must continue to analyze both demand and supply dynamics. That’s going to provide a more complete picture of that alignment, how demand can be met, and ultimately the company’s overall outlook.
Mary Vasile: Okay, so just to recap for our viewers: demand shaping can help mitigate ongoing supply shortage problems, help increase revenue, and can be successful when supply and demand are aligned.
Thank you so much for those insightful tips, Andy. And thank you for joining us today.
Andy Harris: Yeah, absolutely.
Mary Vasile: And thank you for watching. Now you’re in the loop. See you next time.