Maintaining Demand And Supply Ratio

 

Whenever the demand of the market is matched with supply of supplier, there becomes smooth market operation. The gap between these two factors, ‘demand’ and ‘supply’ acts as the main reason for various market obstacles. Unless the product is scarce and unless the demand of market is fluctuating, there can’t be other reason for the trouble in smooth market running.

Why is the market of petroleum product always in hustle? It is because the supplier of Nepal has been failing to satisfy the demand of the market, and hence there is huge demand of these products and the supply is extremely low. This creates troubles time and again creating shortage or price hike.

The demand and supply has to be matched. Huge demand and low supply creates shortage, and huge supply and low demand makes the supplier’s loss. Hence, there has to be a quantities analysis between these two factors, and hence the product has to be supplied.

Not all sectors has limited means to get into market like FM stations, because the frequencies cannot be increased, no matter how much application is provided. Hence, the ultimate solution was not to allow major FM stations of Capital to reach out of valley that would help in promoting the local FM stations of the specific region.

So, who is responsible for maintaining data’s? Is there any database showing the production capacity of entire noodles in Nepal per day? Is there any database with the records of quantity of noodles consumed every day in Nepal? No! And this is the reason why there is imbalance of noodles supplies in Nepal. I remember those lots of noodles five years back, from noodles like Saka Laka Boom Boom to Big Mimi, which hardly exists now. This is because of huge supply of noodles with limited demand.

Every single organization’s shut down is a loss for the country after all. It affects revenue, it reduces employment opportunities and creates obstacle in GDP finally. Now, it is Government’s fault when they provide license to such organization. Simply because of the lack of this database, Miho Noodles was provided license, and despite of it’s heavy advertisements the product had to disappear in such a small time. Until and unless government fails to grab the actual market data of this trend is likely to continue in upcoming days as well.

There exist cases where despite of having a good database, market don’t turn out to be smooth. Supply of electricity in Nepal can be taken as instance. Government knows how much is the production capacity and how much is the daily demand of the country, but still fails in making a smooth market. But, this database helps to recognize the necessity of Hydro power projects in Nepal ultimately. So, a database is must for any business.

Entering into business seriously requires huge research. Gone are days when the heavy pocket simply would make your business and profit confirm. No matter how much you invest in noodles today, Wai Wai is likely to make your business down. So, until and unless Wai Wai fails to make a proper supply of noodles to the market, your investment is likely to go down. Or, you need to come up with heavy strategy to compete with Wai Wai. You may say this impossible thing, but was not Wai Wai Aalu Tama out of stock just after the quake? Maybe CG was not prepared for holding up the inventories, and had to bear stock out costs.

Have we ever thought why Coca Cola Company has never failed in timely delivery? There are hardly any cases when you don’t find these drinks in the market. One shop may run out of it, but you can get in the shop next step. It is due to the database that they have showing daily consumption per day, and they estimate their production as per it. They know when the product is about to get over in each locality, and hence they supply it in the specific time.

 

No matter how big or small organization you are involved in.  You need a data base after all. No matter if you are yourself run candle manufacturing, or if you are running a huge company producing cements, your business is less likely to reach success in perfect market. This has been the ignored part after all.

Exactly like this, unless Government will have the accurate database of running firms showing the actual demand and supply of products, Government has to bear the loss as well. It is never wise thing for any organization to keep stock in hold. Holding a product costs separate, and when it is for perishable products, they can be spoiled. Vegetables thrown out of Kalimati Bazar are an example of failure to understand the real demand and maintain supply. Even when it is for non perishable product, it may get out of fashion. Considering today market if Apple decides to make huge quantity of I phones and keep in hold, their demand may completely decline by next ten years. So, considering today’s market analysis, any organization has to make an appropriate decision.

I seriously don’t think there is a smooth balance maintained between demand and supply in any of the goods produced in Nepal. Tomato’s price would not be Rs 30 per kg today, and rise up to Rs 50 per kg two days later, and again fall back to Rs 30 per kg in next two days else. Or even if the price is maintained, the customer preference varies, if they Sita Ram milk today, they may go for DDC next day looking various other facilitating factors. This clearly shows the imbalance in demand and supply ration.

If you are intending to enter into business world, or if you are struggling there, instead of expecting Government to have the data, you yourself need to keep the database of demand and ratio balance with you! Imagine the situation, what would it be like if there are hundreds of student and a single teacher for the class.

 

       Published in Synergy Souvenir by The Nepal Chartered Account Students Association of December 2015 issue.