Last edited 20 Feb 2021

Demand chain


[edit] Introduction

A firm wanting to bring its goods or services to market must undertake a series of activities that may include designing, manufacturing, marketing, sales, delivering and supporting the product (after sales). This comprehensive suite of activities is called the value chain and is split into two halves: demand chain and supply chain.

[edit] Demand chain

The demand chain is concerned with all the activities a firm undertakes to generate the demand for its goods and services, so it includes marketing, sales and service. As the demand chain drives demand, and demand comes from customers, it is customers that must be directly and successfully influenced by demand chain activities.

Managing a demand chain involves managing the relationships between customers and suppliers so that maximum value is created for the customer while the demand chain overall incurs minimal costs.

[edit] Supply chain

In contrast, the supply chain – the other half of the value chain – encompasses those activities (purchasing, manufacturing and distribution undertaken by companies and people) that are needed to transfer products from suppliers to customers. So, turning natural resources, raw materials and components into finished products that are eventually delivered to customers is typical of supply chain activities.

Many activities in the supply chain may be performed by individual companies which, while they form part of the chain of supply have no direct link or even interest in other supply chain firms.

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