What Are the Types of Demands in Supply Chain Management?

Supply chain management is the business discipline concerned with creating and maintaining cost-efficient and reliable distribution channels to ensure that a company's goods get into customers' hands consistently. Supply chain management utilizes strategic partnerships and vertical integration strategies to continually improve distribution processes, reducing delivery times and incidences of waste, spoilage or failed deliveries. Two types of demand for products come into play in supply chain management: push demand and pull demand.

Push demand is the term given to demand that is built up by the actions of a seller. Manufacturers and other original sellers create push demand to entice distributors and wholesalers to give new products a try or to stock up on existing products with larger-than-normal orders. Wholesalers and distributors can create push demand through their retailer customers, as well, who in turn can create push demand through their own customers.

Supply chains must be robust and adaptable enough to compensate for larger-than-usual loads from time to time due to suppliers generating push demand.

Pull demand comes straight from consumers. Pull demand is generated when end-consumers ask for products by name at retail outlets. Recognizing an opportunity to make money by stocking the requested product, retailers will request the product from their distributors or wholesalers, who will in turn create more demand for the original seller.

Supply chain linkages must be adaptable enough to carry new types of products from new suppliers with short notice to compensate for advertisers generating pull demand.

Business-to-business sales promotions are a tried-and-true method of creating push demand. Manufacturers will offer their customers such a great deal on large orders of new items or other specific inventory that they simply cannot resist making a large purchase. Manufacturers may entice wholesalers to stock up on new products by describing a forthcoming advertising campaign or sharing sales numbers from test markets in addition to offering price discounts.

Direct-to-consumer advertising is the way to generate pull demand. If a newer company has trouble getting their unknown products onto retailers' shelves, or has trouble getting wholesalers to give them a chance, they can use advertising to get people talking and asking about their products at their favorite retail outlets. After being asked enough times to stock a particular item, purchasing managers will think twice about speaking with a previously unknown manufacturer's sales representative.