I bring up the screen for SKU #1234 to check the "available-to-promise" data, saying a silent "thank you" for having such good order promising information. Available-to-promise relates customer orders for an item to its inventory — both current and future. Current inventory is what's in the warehouse now, future inventory is what's coming, as expressed by the master production schedule. See Figure 1.

Figure 1

I think to myself: "We can give her 58 right now, 90 next week, and the balance of the 200 in week four." So that's what I should tell her, right? Wrong. I'm not in a position to tell her anything yet. I should be asking, not telling, because this is a very large order. It's for 200 of an item whose monthly forecast is only 200. In the jargon of our trade, it's "abnormal demand" — in this case an entire month's worth of product on one order to one customer. Here are some of the things I need to know before I can do a proper job of promising this order.


Is it in the Forecast?
Just who is this customer? Is she an ongoing customer whose past business was used as a basis for the forecast? Or is she a brand new customer, someone we've never dealt with? Or perhaps an infrequent customer who does business with us only rarely?

If it's a new customer, or an infrequent one, then chances are she's not a part of the forecast. The forecast (future demand) drives the master schedule (future supply). We may have demand and supply nicely in balance — but if an abnormally large order comes along and we don't handle it properly, the situation can get out of balance in a hurry.


Impact on Other Customers?
Let's vary the situation shown in Figure 1. Assume the inventory is not 85, but rather 8,500. Kim's order is not part of the forecast of 200/month. Does it matter? I don't think so. We've got tons of inventory, almost four years supply. We'll be delighted to ship this lady 200 right away (would she like more?) — because doing so won't impact our existing customers for this item.

Job 1 is almost always to protect our good customers — one reason being that it's far less costly to retain existing customers than to go out and get new ones. Job 2 in many companies is to aggressively develop new customers, and rightly so. Frequently these kinds of abnormal demand situations represent opportunities to turn a new or infrequent customer into a friend — but almost never at the expense of our existing customer base.


What's the Real Need?
Let's reset the example back to its original state; we have 85 in inventory. Kim asked me how soon she can get 200. My response to her may well be: How soon does she really need them? When does she need the 200? She may answer that she needs them all right away. O.K., that clarifies that. On the other hand, she may say that she needs 10 per week for the next 20 weeks. That puts a whole different spin on it. We can probably give her 10 a week without negatively impacting our other customers. We may elect to offer some friendly terms on pricing and freight to help build a new relationship and at the same time to make our demand more linear and less lumpy.


Who Decides?
This isn't a question to ask the customer. Rather it's a question that we need to get settled in advance as part of our overall demand management processes. In our example, I'm a customer service representative. My boss is the department manager. Her boss is, let's say, the director of sales, who in turn reports to the vice president of sales and marketing. Given the situation as originally presented in Figure 1, I doubt if I should be empowered to make the decision whether or not to give all 200 to this new customer. The reason: From where I sit, I don't have a sufficiently global view. I don't deal with all the customers. I may not know the details of my boss's boss's plans regarding new customer acquisition in general, and this potential new customer specifically. There's another possibility: The plant may have all the materials it needs to run this order quickly, and may actually be looking for work. I probably don't know this from where I sit in customer service. However, someone from the operations side of the business surely does, and they should probably have input into this kind of decision.

There are risks here. We run the risk of jeopardizing our relationship with existing customers if we give too much product to this new one. On the other hand, if we don't try to help Kim with this order, we may risk losing a potentially valuable customer. An appropriate response for me might be to ask Kim if I can call her back shortly, and then check with the appropriate people.


How to Identify?
This example was easy. I was on the phone with the customer and things were very clear. But what about orders that come via electronic data interchange? Companies who handle abnormal demand well typically have logic in their order entry systems to identify these abnormally large orders. These are not automatically promised, but rather are kicked out to the appropriate person(s) to make the call.

It's also good practice to be able to identify these abnormal demand orders once they're in the system. This helps people on both the demand and the supply sides of the company to be aware of what they're dealing with and to track them effectively.

One last point on this identification issue. After the order is finished and shipped (hopefully on time and complete), the abnormal identification should stay with the order as it's passed to the history file. The reason is for future forecasting purposes. If the order isn't clearly identified as abnormal, it will enter the statistics upon which next year's forecast will be based. This, of course, can result in inflated forecasts and lots of inventory that nobody wants.

In my travels I haven't seen many companies doing an excellent job of managing abnormal demand. Those that do are a leg up in the battle for ultra-high levels of customer service and satisfaction. To get started, you might want to get some folks together from both the demand and the supply sides of the business to identify: 1) what constitutes abnormal demand in your company; 2) how it can be identified; 3) who decides how to handle it; and 4) how can it be tracked inside the system. In other words, develop a process for controlling abnormal demand.

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