Is Demand Finding Supply?

by Jay Deragon on 03/01/2008

 

Is Demand Finding Supply?Suppliers push products and services to market. People represent the pull for products and services through demand.

In economics, supply and demand describe market relations between prospective sellers and buyers of goods and services. The supply and demand model determines price and quantity sold in the market. The model is fundamental in microeconomic analysis of buyers and sellers and of their interactions in a market.

Suppliers, manufacturers, service providers and distributors that have realized efficiencies in their supply chains – but that have struggled to gain similar returns from classic customer relationship management (CRM) solutions – are now increasingly embracing demand chain management (DCM) technologies to cut costs and optimize sales processes,

Demand Chain Management is the management of upstream and downstream relationships between suppliers and customers to deliver the best value to the customer at the least cost to the demand chain as a whole. The term demand chain management is used to denote the concept commonly referred to as supply chain management, however with special regard to the customer pull.

The more widespread adoption of Internet technologies, combined with the challenging sales environment stemming from the conversational rivers enabled by the social web will cause selling organizations to heighten their focus on the demand side of the value chain.

What is The Demand?

Fundamentally the social web has enabled people to have a voice about anything and everything. When minimum expectations about a product or service are not met the conversations swell like rivers and spread one to one to a million at the click of a mouse.

Tomorrows leading companies will have to engage people through the social web if they hope to fulfill the pull created by conversations. In doing so, they help themselves by acting on the conversations centric to speeding up cycle times, eliminating redundant activities, extending market reach, and most importantly, enabling buyers of all shapes and sizes with more choices and with greater input into, and control over, relevant business processes.

Many people are tired of companies controlling the conversations about their products and services. The old tricks of the trade are no longer tricks but obvious ploys for peoples attention and the people aren’t buying the tricks anymore.

The old theories of supply and demand have been centric to microeconomics. The new theories will become centric to conversations and the impact said conversations have on markets and the subsequent economics of those markets. The people are now in control of the conversations they want to have, the questions they want answered, the products they want made, the services they want to have and most of all the quality they require. If existing markets aren’t listening and participating they will likely be replaced by those that do.

As the social web becomes more “open” with less walls created by silos the conversational rivers created by the people will become more connected and more influential over markets. The demand on businesses will be for higher quality of service and performance and hiding behind slick marketing messages will become more and more transparent. The shift from supply to demand will have profound effects across every business segment and demographic imaginable.

Conversational groups, called conversations on (name the brand), centric to the top 50 brands in the world have already been established on Facebook and the dialog has just begun. Last week during a Webcast with Doc Searls several brands were mentioned including Comcast, Ford Motor and a host of others. Subsequently the membership in the related groups on Facebook has spiked in growth, see the Comcast Group here

Demand side economics is a chain controlled by the customer. The larger the chain the greater economic influence over markets. Are you part of the chain or still pushing from the supply side?

What say you?

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