Supply factors and its influence on Demand-Supply Strategy in SCMluxe

Managing supply and meeting (or not meeting) demand assumes a different dimension in SCMluxe.  For instance for most mass produced goods, the only aim would be to increase supply, meet increased demand and maintain margins. However for luxury goods, not meeting demand might simply be a brand strategy – maintaining exclusiveness and desirability (besides artificially keeping prices high). Thus the supply strategy should dovetail into the overall plan for the luxury product.  Let us look at some factors that influence supply and how they need to be incorporated into the overall demand-supply plan

Supply Factors	Demand-Supply Planning
Supply limited by natural circumstances – Eg: Non availability of raw materials or rarity of occurrence: gems, platinum, ermine, art	Adjust Price to level demand to supply (Volumes)
Supply controlled by innovation – Eg: patents for features in products, non-reproducible features	Protect innovation by copyrights/patents. Plan demand-price-supply based on timeline of innovation protection available (patent period etc)
Supply restricted by production – Eg: bespoke suits, monogrammed silverware, custom built cars	Plan supply based on production capacity. And on need to retain brand exclusivity if required
Supply based on exclusivity – Eg: Private clubs, limited edition merchandise	Plan supply around brand positioning around level of exclusivity desired

Interesting we see almost all products having several supply factors influence them in varying degrees – say innovative products where supply can be increased to meet increased demand as required, but its brand positioning might stress on exclusivity which will need supply to be restricted.  The Vertu phone limited by the availability of its gold casing as well as its copyrighted name or “Art” limited both by natural circumstances and restricted production. A mix and match planning methodology would work but a common rule of thumb would be to simply follow the brand positioning strategy – after all brand management as everyone knows is the be all and end all of the luxury goods industry