What does it mean by market demand driven supply chain planning? It means you are given a product, a price, and a time frame. Once you break those down, your product becomes your goal or the end result you want. The starting point is the lowest price possible for your product in any distribution channel. The end result is a finished product or something you can sell. This is market driven, because all of the work has already been done.
What does it mean by demand driven production plan? In a demand driven process, the starting point is a product, but the end result is not determined yet. A good example would be a consumer research company doing a survey on a particular brand of toothpaste. Once they have the toothpaste name and number, they figure out how much people need and want that brand of toothpaste. Then they figure out if that particular brand of toothpaste will do well in their market, and if so, what kind of prices and other things to charge for that brand of toothpaste.
Now, once that company figures out all of that, they then figure out how to get their product into the hands of that consumer. How will they do that? The answer is marketing. Marketing the product. If you have a new toothpaste product that is very successful, you can expect your income to skyrocket.
Market demand driven production means you first figure out what the demand for a product is. Once you've figured that out, you then figure out how you can meet that demand. You may have to create a whole new product to fill in the demand. It may be more efficient to produce that new product in another location and ship it to the customer, rather than having the product shipped from one warehouse and handled by 5 people.
Many companies do this with their consumer products, because if they didn't do it, they would never get any sales. They figure out where their products are going to be sold, and then they buy the demand for those products, and they fulfill it. But if they didn't do this and a new product shows up on the scene and beats the existing product in sales, they are out of luck. So they purchase the demand and bring in another branch of marketing to take care of the difference.
So now, we come to what does it mean by market driven production plan? What do you do next? Well, if you figured out where your demand is coming from, and you know the market is there too, then you can probably figure out how to meet it. This means finding the best way to get your product in front of the customer, and in front of them in a timely fashion. What happens when the customer goes to a website or buys a product off of the Internet, is that they have all this information at their fingertips. They can see the products, they can see the price, they can see the shipping costs, and they can even see the testimonials.
If you can answer these questions before the customer buys, you've just won half the battle. Now you need to make sure that you can get your product in front of them as fast as possible. You want to be able to give them the solution to their problem, and not turn around and sell them something else. What does it mean by market driven products? It means that you don't buy products based on the demand for them, but you buy products based on the potential for them to sell.
In other words, you don't think about whether or not a product is going to sell, you think about how much money you can make from the sale. You're not concerned with whether or not a product is going to be safe or effective. All you care about is making as much money as possible off of the sale. If you're market driven, your sales will reflect this. It's truly the hallmark of a true market-driven production process.