May 13, 2007

Managing demand

Like many of you, I decided to send my mom flowers for Mother's Day. She lives 500 miles away, so I've found a florist near her with an online ordering system. They make it easy by retaining her name and address on file, along with all my ordering information. And they send me an e-mail before her birthday and Mother's Day. Good, but unremarkable so far.

You can imagine the disruption to their workflow caused by a holiday like Mother's Day. It's not like you can stack up a big inventory of flower arrangements weeks in advance. You've got only days to get all your orders completed and delivered. So how do you manage demand? (Jim Womack and Dan Jones had some good thoughts on this in their book "Lean Solutions.")

When they send customers the Mother's Day e-mail, they offer a discount for ordering early. That adds information to their production schedule -- they know what flowers, vases, cards and accessories to order, plus they can begin to sketch out the route for the delivery trucks.

Then, when you place your order, they offer you a $6.00 discount if you schedule delivery on Thursday instead of Friday or Saturday. I don't know if I'm typical, but I thought, "Why not?" and put Mom's flowers on the schedule for Thursday. She won't mind. In fact, it might be better because in a big family, everyone else is going to bring flowers on Sunday or have them delivered on Saturday.

So now the florist knows what to order and can move some of the production a day or two earlier than it could have been started sooner. You've lowered the demand peak and spread it out over a longer period of time.


Anonymous said...

I' helped my favorite pizza delivery store to be organized in a similar way during great sports events (including Athens Olympics).
Of course you can't deliver pizza a day in advance ! but they ask (by phone) every regular customer for his programme, the number of persons viewing the event on TV etc. It works !
Triantafyllos Katsarelis
Dipl. Civil Engineer - MBA
European Assessor EFQM
from a Athens-Greece

Unknown said...

Good example! The same principle - better information for better planning.

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