Demand Signal

Tags: Glossary

A signal from a consumer, customer, or using operation that triggers the issue of a product or raw material. The demand signal is most efficiently an electronic data transmission, but it could be a physical document, kanban, or telephone call.

What is Demand Signal?

Demand Signal

In the world of logistics, a demand signal plays a crucial role in ensuring that products and raw materials are efficiently supplied to meet the needs of consumers, customers, or using operations. Simply put, a demand signal is a message or indication that triggers the issuance of a product or raw material.

The most efficient form of a demand signal is an electronic data transmission. This means that the information is sent and received electronically, allowing for quick and accurate communication between different parties involved in the supply chain. Electronic demand signals can be transmitted through various means such as email, electronic data interchange (EDI), or through specialized software systems.

However, it is important to note that a demand signal can also take other forms. It could be a physical document, such as a purchase order or a requisition form, which is manually filled out and sent to the supplier. This method may be used in situations where electronic communication is not feasible or preferred.

Another form of a demand signal is a kanban. Kanban is a Japanese term that means "visual signal" or "card." It is a physical card or token that is used to signal the need for more inventory or materials. When a kanban card is presented, it indicates that the current stock has been depleted and needs to be replenished. This visual signal helps to maintain a smooth flow of materials and prevents overstocking or shortages.

In some cases, a demand signal can also be communicated through a telephone call. This method is often used in urgent situations where immediate action is required. For example, if a customer suddenly realizes they are running out of a particular product, they may call the supplier to place an urgent order.

Overall, the demand signal serves as a critical link between the consumer, customer, or using operation and the supplier. It ensures that the right products or raw materials are provided at the right time and in the right quantities. By utilizing efficient electronic data transmissions, physical documents, kanbans, or telephone calls, the demand signal helps to streamline the logistics process and optimize supply chain operations.

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