AberdeenGroup: Best-in-class companies dominate profitable markets through next-gen demand management
Boston — January 5, 2005 — Enterprises that deploy next-generation demand management processes and technologies are dominating profitable market segments and leaving competitors to fight over the crumbs, according a recent AberdeenGroup Report.
"The Demand Manangement Benchmark Report" determined that companies with best-in-class demand management capabilities consistently outperform their competitors in all customer facing performance indicators.
The report demonstrated that the average improvement from a demand management initiative was 4.7 percentage points in percent gross margin, 24 percent gain in inventory turns and 13 percentage points gain in forecast accuracy.
"Market winners consistently focus and dominate the most profitable market segments and leave the less profitable segments to the competition," commented Stan Elbaum, Aberdeen's senior vice president of research and author of the report. "Next-generation technologies in real-time demand forecasting, pricing management and optimization, and market segmentation and prioritization are mission critical applications for these dominating players, who continuously analyze and redefine their target segments"
Elbaum recommends that companies take the following actions to extract maximum value from their initiatives to improve their demand management capabilities:
* Develop a single operational demand forecast
* Segment the marketplace to uncover more granular sets of customers/product/channel/market mixes and focus on the most critical/profitable segments
* Develop an iterative demand management process that involved multiple scenarios and "what-if" simulations and targets margin and profitable revenue growth as the key objectives
* Provide the sales organization with the incentive from metrics that include forecast accuracy, and profit targets as well as revenues
* Improve demand forecasting accuracy by leveraging the use of next generation causal based forecasting, neural network and pattern recognition technologies
The "Demand Management Benchmark Report" provides actionable competitive frameworks with which to benchmark companies against best-in-class competitors' strategies, processes and technologies. Different prioritized specific recommendations are provided based on the current level of demand management maturity to guide a program of improving top and bottom line results and competitiveness.