2 Replies Latest reply on Sep 23, 2009 7:30 PM by davidloppenheim@gmail.com

    Needs and Wants

    mubarak79 Newbie

      Needs and Wants:

      (Q 1) Describe the Specific Meaning Of Commercial Needs and Wants?

      (Q 2) Explain the parameters used in assessing your company's commercial needs and wants?

        • Re: Needs and Wants
          SupplychainGuy Newbie

          Marketing develops a plan to sell 12000 units of a product during the next year which creates a "want".   Purchasing orders the required raw material and purchased components to produce the 12000 units fulfilling the "want".    As a result of fulfilling the "want":

          1. capital resources are spent up front requiring 12-15 months or more to acquire the ROI

          2. warehouse space is committed shelving the raw material/components until they are dispatched into the production cycle

          3. warehouse staff may be increased to process the high volume influx of material on the front end and become idle after material is received

          4. production schedules long runs of the units at the expense of smaller orders of other items causing "late delivery" to other customers

          5. warehouse space is consumed stocking 12000 units of finished goods which will require a year to turnover

           

          Supplier impact of  immediately fulfilling a customer "want" is:

          1,  production capacity may be reached for an extended period until the long run is completed

          2.  resources are committed at the expense of providing service to other customers which results in late order fulfillment to  other customers

          3. customer payment could run late since customer cash flow is tied up  warehousing unsold product

           

          Supplier Order Entry should determine the Customer "Need" by:

          1. having an understanding of plant capacity by shift, day, week, month, and visualize the length of time capacity will be "booked" to fill the order

          2. have knowledge  of other customer projected orders in the pipeline and how they will effect "capacity"

          3.  asking when is the material "needed" to satisfy the customer requirement

          4.  entering a blanket order with monthly release dates to spread out production scheduling and support JIT customer delivery

           

          A good supplier should know the difference between "need" and "want" and be able to provide this level of service to his customer to the advantage of the customer and the supplier.