Strategic demand management for capacity-driven companies article cover

Strategic Demand Management for Capacity-Driven Companies

Good demand management looks different depending on how much a company can flex its capacity. The paper sets out four capacity structures and the demand management emphasis that fits each one, drawing on a demand management assessment we led for a U.S. retail pharmaceutical client.

Match the emphasis to your capacity

Fixed high capacityPlan long term

Semiconductor-style economics: capacity is costly and slow to add, so long-horizon demand planning comes first.

Highly variable capacityCommunicate fast

E-commerce-style peaks: real-time communication with customers and partners lets capacity scale up and down.

Moderately variable capacityInfluence demand

Beverage-style seasonality: promotions and order windows smooth demand so production stays steady.

Fixed average capacityPrioritize demand

Lean-manufacturing style: allocate constrained output to the orders and products that matter most.

Set forecast accuracy targets by product type

85 to 95%critical, steady-demand products, where shortages are costly
75 to 85%seasonal products with predictable cycles
70 to 80%less critical lines like personal care and snacks

Aligning these practices to capacity type avoids reactive adjustments, reduces expediting and lost sales, and builds a more resilient supply chain. We benchmark demand management processes and forecast accuracy against industry peers, then set the S&OP governance and business rules across demand, supply and finance.

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