Most people understand the concept of demand in terms of defining service delivery but just in case according to Wikipedia ‘The term demand signifies the ability or the willingness to buy a particular commodity at a given point of time’. Demand is taken to mean the pull of product or service by the customer or consumer and by focusing on this demand, or better still the causes of the demand then a business process can be optimised.
Most people also understand the concept of being a customer and being a consumer but the two words are often confused and taken to be the same thing. For the purposes of this blog a customer is someone who expresses choice through money, that is the person who actually pays for the goods or services. A consumer, however, is the person that uses the product, eats the cornflakes, watches the television and takes the flight. A consumer can be a customer and a customer can be a consumer but it is possible that the two people can be different.
Now back to demand. Most systems consider a demand that is linear. Someone buys a product from a shop, the shop buys it from a wholesaler and the wholesaler buys it from the manufacturer. The product is drawn in a line by the consumer and the choice is expressed by the customer. This is what we think of when we consider most commercial transactions. In private sector trade the customer usually has a close relationship to the consumer. When in a supermarket the customer is usually buying things either for themselves or for their immediate family. Demand is created by the children but it is the parents that will express the choice with money and so become the customers. By focussing on creating need in the minds of the consumer and by understanding the flow of demand a commercial business can optimise their supply chains to maximise profits from that particular product or service.
This type of demand flow also holds true for many of the products or services provided by the public sector as well. Apparent linear demand can be seen in accident and emergency departments and housing benefits claims sections for example but in these cases there is an added complexity in that the customer, the person paying, may have no relationship to the consumer at all. You break your leg and get taken off to A&E. You are paying for this service but indirectly through general taxation. The amount of tax you pay does not bear a direct relation to the cost of the service. Indeed if you are a recipient of housing benefit it is unlikely that you will contribute very much to the overall cost of the service.
The title of this blog is ‘Two types of demand’ and in the public sector there are many services where the concept of linear demand breaks down and demand is affected from many different directions. In these cases it can be said that there is a network of demand.
Society locks persistent offenders in jail but who is the consumer, the prisoner, the victim or society in general? Who is the customer, who expresses choice through money, the tax payer, central government or the inspector of prisons? In this example it may well be that the prisoner has contributed to the cost of their own incarceration and so they are the customer of a service that I am certain they did not want.
An abused child with learning difficulties is taken into care. Who is the consumer this time, the child, their carer or again society? Who is the customer, the social worker, the local authority or the government?
How do you map the demand flow in these examples and how do you optimise it to improve efficiencies? To do this requires a consideration of all players in the supply network. In the linear examples there are generally three contributors to the demand chain, suppliers, customers and consumers. In the more complicated public sector examples there is a fourth stakeholder or agent and so this type of network demand can be referred to as an ASCC model (agents, suppliers, customers and consumers).
In the ASCC model there can be many suppliers and certainly many customers even if there is only one consumer but it is the number of agents that add complexity. Let’s go back to the child care case. Here there is a whole plethora of agencies involved who are not providing, paying for or consuming the service such as the local authority (they may be the provider), central government, councillors, members of parliament, inspectors, pressure groups, other family members, media etc. etc. etc. The requirement for intervention and therefore the demand may come from any one of these agencies.
To understand this type of demand flow requires an analysis of all of the players in the ASCC model. The whole process can not be maximised but this information can be used to identify the most important or influential agencies and inter-relationships within the overall demand for the service. This is where attention should be focussed and the service flow optimised for maximum benefit.
In the public sector, demand flow can still be mapped and optimised for the benefit of the consumers (whoever they may be) and the overall tax payer (who is probably you) but we should not fall into the trap of considering these kinds of services as simple commercial transactions between those who want to consume and those who have the ability to supply. Therein lies the road to confusion and disappointment as there are at least two types of demand.
Thoughts from a Guerrilla Worker 