It is the demand planner's responsibility to recognize this situation and take a different approach to generating his baseline forecast. There are many ways of going about this. For example, the demand planner might take an average of the percentage difference between sales over the last six months and the same period from the previous year. Obviously, this must be done at an appropriate level – perhaps by product or by some product grouping. This percentage reduction (or a fraction of it, if appropriate) could then be applied to the forecasts generated by the normal processes, whether statistical or collaborative. This new, reduced forecast could become the new baseline.
The demand planner must use effective communication and persuasion skills to explain to everyone what he has done and why, and to generate buy-in to this approach. The advantage of this method is that sales and other collaborators must be proactive in raising individual forecasts if they have hard knowledge of higher demand for a given customer – but inertia is now on the side of the new, reduced, more realistic forecast.
The Bottom Line
How does a demand planner develop these skills? Nothing beats experience – a trial by fire, so to speak. For new demand planners and for those seeking continuing education, organizations like APICS – The Association for Operations Management and the Institute of Business Forecasting & Planning (IBF) offer training programs and conferences that can provide much valuable information.
When it comes to choosing a demand planner, it is critical to have an individual who learns quickly and is able to "think outside the box." A demand planner should by nature be an analytical, detail-oriented person who can also keep the big picture in mind. There will always be new challenges that require creative approaches.
One other thing an outstanding demand planner accepts as a responsibility is educating the appropriate executives on what they need to know about demand planning. Primarily, executives should know how to select a demand planner with the above characteristics and skills and then trust that individual to do his job. Executives should also understand the value of a single-set-of-numbers supply chain and insist that one forecast be used throughout the organization. Finally, executives must understand the limitation of high-level forecast accuracy numbers and the impossibility of reducing this to one number.
With a powerhouse team of demand planner and supportive executives in place, a business is well on its way to a robust sales and operations planning process to optimize its supply chain.
About the Author: Sujit Singh is chief operating officer at Supply Chain Consultants, where he is responsible for managing the delivery of software and implementation services, customer relationships and the day-to-day operations of Supply Chain Consultants. His industry experience includes work in the semiconductor, chemicals and glass (industrial and commercial) industries. Singh is a recognized subject matter expert in both forecasting and sales and operations planning (S&OP), and he is certified in production and inventory management and a certified supply chain professional by APICS – The Association for Operations Management. More information on Supply Chain Consultants at www.supplychain.com.