Demand Management: Don't Look Back

Companies can longer afford to "plan the customer" and must look to processes, supported by appropriate tools, for more collaborative and integrated demand-supply planning


4. Understand the Impact

Align demand management decisions with the operations performance metrics of the company.
  • In the midst of constant change, decisions must be made "in the trenches" quickly throughout the day, with insight into the impact of those decisions on key performance indicators (KPI).
  • A comprehensive scoring mechanism is needed that can accurately predict the impact of proposed actions and that weighs the alternatives against company goals and customer requirements so the best option can be implemented.
  • By understanding the impact on KPIs in advance of taking action, decision makers are empowered to manage to the plan (and its objectives) despite variability.

Adjust Processes and Adopt Tools

Despite large investments in demand planning and forecasting, and traditional sales and operations planning (S&OP) tools, more often than not demand management teams continue to rely on manual processes, complicated spreadsheets and other makeshift measures. These tend to be quite time consuming and rarely yield optimal results given the complexity of the tasks.

Those on the frontlines — the demand managers, customer service reps and sales operations staff charged with understanding true demand and aligning finished good supply accordingly across globally distributed fulfillment networks — have no easy job. Their role is an exercise in balance and compromise.

Companies need to empower their frontline staff with tools that can support the full scope of modern day demand management challenges as discussed throughout this article. This includes:

  • Access to comprehensive data — work collectively from the same integrated information source;
  • Increased collaboration with internal groups and customers to gain (and maintain) a consensus on true demand;
  • Enhanced alerting to quickly spot misalignments; and,
  • Rapid and collaborative analysis of action alternatives to drive more profitable response to changes.

Without the right tools in the hands of the right people, the type of demand volatility experienced today is difficult to manage and impossible to predict, and it can trigger a steady erosion of customer satisfaction, margins and market share.

In Summary

Since it's true that you can no longer plan the customer, industry leaders are implementing processes, supported by appropriate tools, for more dynamic demand planning and management. Companies today face two acute challenges: How do you make a better demand plan, and how do you respond while knowing that the plan will always be subject to a certain degree of inaccuracy?

Gone are the days of sequential demand planning and supply chain planning processes that operated in batched silos. Today's imperative is for a collaborative and integrated demand-supply planning process supported by proactive monitoring and rapid response to change.

The Inventory Discussion

We all know an unplanned influx or drop in demand can wreak havoc on a supply chain and can cause severe pain to a business. Short of a strategic solution to responding to change, many companies have institutionalized costly "just-in-case" measures such as buffer inventories, expediting and overtime in an attempt to compete. These practices are tolerated less in a cost-conscious world.

During these tough economic times, inventory exposure is a frequently raised topic. Too much inventory, or inventory that is poorly positioned, could potentially be fatal in the current business climate.

Many companies did not anticipate the full impact of the recession and paid dearly in the form of excess inventory in all stages of the supply chain. The impact of inventory on cash flow can be devastating, resulting in everything from payable extensions to missed payrolls and loan defaults.

Today, more than ever, it is vital for companies to evaluate the demand outlook more frequently and be prepared to make quick adjustments to their inventory positions as a result.

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