Example: independent demand purchasing

[Bob Haugen <linkage@interaccess.com>]

This attempt at a definition will seem to be very circular (and it is).
"Independent demand" is the opposite of "dependent demand".

A dependent demand is dependent on some other demand or
event:  for example, manufacturing component demands are
dependent on the demands for the products of which they are
components.  Retail replenishment demands are dependent
on point-of-sale or warehouse withdrawal events.  Medical
supply demands are dependent on point-of-care usage events.

B2B independent demands tend to be demands for such items
as capital goods, office supplies, MRO (maintenance, repair, 
and operating ) items,  and anything else for which the
dependency is unknown.

Independent demands are usually handled with standalone
purchase orders, although some items might be covered
by contractual relationships including volume/price 
and other agreements.  Those might use blanket POs
and releases.

Purchase orders may have complex internal process steps
including requisitions and approval cycles before a PO 
is issued. 

When a customer sends a purchase order, it is often
converted into a sales order (internally) by the vendor.

The reason I belabor all of these aspects that everybody
knows is to contrast them with procurement of dependent
demands, which was covered in the auto and retail purchasing
examples:

* Dependent demands will be linked to upstream and downstream
  events; independent demands will not (will be standalone).
* Dependent demands are more likely to be covered by contracts.
* The contracts will usually be more detailed.
* The signal to ship the goods will be represented by a PO
   for independent demands; for dependent demands, it is
   increasingly likely to use a lighter-weight document with
   different semantics (i.e. kanban).
*  Independent demands are more likely to go through a
   complex internal process of authorization, whereas
   dependent demands are essentially pre-authorized
   by the acceptance of their relative independent demand.

In other words, the internal and external business processes
are likely to be significantly different for independent vs
dependent demands.

Note:  configured products (from another example) may be
either independent or dependent demands.