Note, however, that the inventory reductions are not uniform across the supply chain. Whereas the supplier has a reduction in safety stock of 78.4% (from 464 to
100), the retailer experiences no reduction. In fact, the farther up the supply chain, the greater the safety stock reduction. This illustrates a paradox of demand plan- ning in any supply chain—the very companies that are most needed to implement supply chain demand planning (i.e., implementation of systems to share with sup- pliers real-time POS information held by retailers) have the least economic moti- vation (i.e., inventory reduction) to cooperate. This leads us to the concept of demand management.
Demand management is the creation across the supply chain and its markets of a coordinated flow of demand. Much is implied in this seemingly simple definition. First, the traditional function of marketing creates demand for various products but often does not share these demand-creating plans (such as promotional pro- grams) with other functions within the company (forecasting, in particular), much less with other companies in the supply chain.
Second, the role of demand management is often to decrease demand. This may sound counterintuitive, but demand often exists for company products at a level management cannot realistically (or profitably) fulfill. Demand management implies an assessment of the profit contribution of various products and customers (all with capacity constraints in mind—including the capacity of all components in the BOM), emphasizing demand for the profitable ones, and decreasing demand (by lessening marketing efforts) for the unprofitable ones.