Strategies for dealing with derived demand Bas

In this article, we present the results from an exploratory investigation of the derived demand phenomenon as it is experienced by 14 suppliers near the beginning of the supply chain. We present derived demand as an information problem, i.e. a problem concerned with both obtaining information about downstream markets and providing information to them. Our findings suggest that the appropriate way to deal with derived demand issues depends on two underlying factors: (1) the value of the product to downstream customers and (2) the firm’s ability to target downstream customers. We discuss a number of approaches to deal with derived demand issues and their implications for managers.