You’ve probably read a lot lately about how to squeeze every bit of value out of your supply chain. The key principles, best practices, and insider’s secrets are all around us.
So, for me to actually recommend another article for you, I’d have to be totally convinced that it was something you could apply to your strategy right away.
That’s exactly what I thought of The Hackett Group’s recent article, “Demand Planning Optimization – Three Key Steps to Unlocking the True Value of Your Supply Chain.”
According to Hackett, the three key steps are:
1. Know key market trends and their impact on the quality of demand planning.
2. Understand what drives leading-practice demand planning performance.
3. Benchmark against key performance indicators of demand planning excellence.
If your organization is like most, you’ll get hung up on that first step. How can you ever be truly sure of how activity in the market is affecting your demand planning?
Understanding Key Market Trends
In the article, Hackett gives us several hints by identifying the most important trends in the demand planning space for 2015. Among them:
Industry leaders in demand planning are effectively migrating away from spreadsheet solutions and toward more integrated software solutions that better enable customer collaboration, statistical demand forecasting, demand analytics and reporting, exception management, and forecast aggregation/disaggregation.
Getting off spreadsheets is a great place to start on the path to understanding key market trends and factoring them into your demand planning. Many manufacturers and distributors rely on a network of customized, linked spreadsheets to spit out the numbers they need every month. But have you ever met a spreadsheet that truly understands the complex workings of a company that makes and distributes products? Spreadsheets aren’t even designed for that.
Not only that, but spreadsheets notoriously rely on individual employees to update, maintain, and fix them. We so often hear, “Oh….the forecast spreadsheet broke again. Call Mark. He’s the only one who knows how to fix the links.”
That’s all well and good until Mark goes on vacation—or retires. No wonder industry leaders are transitioning towards integrated software solutions that are specifically built to support complex operations like yours. With demand planning software, all the formulas are built in and will remain available to your planners even after Mark retires.
Improved forecast accuracy continues to be an area of supply chain planning that companies feel offers the greatest opportunity for improvement.
We agree that forecast accuracy is a great place to focus. For many manufacturers and distributors, forecasting is hampered by two problems: their methodology is unsophisticated, and their planners are nothing more than numbers-crunchers.
If your company falls into this category, you can greatly enhance your forecast accuracy by leaning on your demand planning solution to do the dirty work:
- Run your initial forecast numbers through the system’s exception-based filters to flag exceptions.
- Use ABC forecasting to rank your most important products.
- Identify trending items and take steps to proactively address any supply issues that may result.
You’ll not only start to generate more accurate forecasts, but also free up your planners to be true analysts instead of human calculators.
Organizations are increasingly pursuing an integrated supply chain planning process that seeks a one-number view of future demand.
Here’s another area where relying on spreadsheets limits the effectiveness of your demand planning. If everyone is updating their own spreadsheets to reflect current realities and projections of the future, then they’re not working off the same information. Sales has its version of the truth. Operations has its version of the truth. Procurement has its version of the truth.
It’s critical to break down the information silos caused by using departmental spreadsheets and point solutions. Until everyone is running the business based on the same information, true collaboration will be impossible. The entire discipline of integrated business planning (IBP)—the natural evolution of sales and operations planning—revolves around the ability of different departments to share data, provide input, and communicate about the direction in which the overall business is heading.
Look for a demand planning solution that not only provides the one-number view you need, but also provides built-in business intelligence that gives you insights and analysis about what your numbers mean for the overall health of your business.
Request Your Demo of Demand Solutions DSX Supply Chain Planning Suite
If your company is serious about demand planning, you need a solution that enhances your forecasting, increases your visibility into supply chain management, and drives your growth. That’s why I’m happy to recommend Demand Solutions Forecast Management. The best way to get to know this solution is to request a demo today.