Posted in Operations and Supply Chain Terms, Total Reads: 558
Definition: Actual Demand
Actual demand is a term used in supply chain synchronization, which implies that the companies make exact number of products suitable for meeting the customer demand. The organizations used to rely on historical statistics of purchase to forecast the number of goods required but these method does not take into account the external factors which can lead to a disturbance in the demands of the customer or the supply chain.
In order to tackle this problem, many companies deploy inventory optimization techniques to balance their inventory levels with the actual demand. It takes into account all the external factors like supplier relations, fluctuating levels of demand, economic and market conditions. It allows the organizations to identify the apt amount of requisite stocks at stores, distribution centres and warehouses. By implementing this, companies are able to cut down on their inventory costs thus becoming more profitable.
Since the organization is able to match supply with demand, it allows it to fulfil the demands of the customer through an appropriate channel. This is how companies are able to match the actual demand.