Demand Planning-Sensing and Shaping Forecast
Demand planning requires a lot of coordination, and even the most coordinated of us has a difficult time keeping everything going smoothly constantly.
Yet, that is what demand planning is designed to do for us and the best we can do is wring out the best information we have and create a plan.
There are there are several steps that companies need to use demand orders for planning capabilities. Several steps are critical in order to avoid issues further down the supply chain.
In an article in Industry Week, the top three best practices in demand planning, according to Gartner’s research, are:
- Define the balance between collective forecasting and statistical modeling. This helps improve accountability for the forecast, and enables continuous improvement across the enterprise.
- Utilize demand shaping and sensing capabilities. “Demand Sensing” is a new form of forecasting. It is a method that leverages new techniques and near real-time information. The format is used to create a more accurate forecast of demand, using current design of the supply chain.
Companies that utilize these processes as part of their demand planning greatly improve their forecast accuracy.
Organizations need to recognize that the plan is not a sales or marketing forecast. Planning is a mix of items that could be sold, balanced by constraints and demand risks. Demand sensing points to leveraging and collecting downstream data in the supply chain decisions.
Demand shaping influences customer demand and moves it toward more profitable categories or specific products.
- Measure the forecast accuracy at the item level, customer and location level. Sales forecast accuracy should be measured for accountability and continuous improvement. The place to measure is in the sales and operations planning review process.
As in life, not everything we plan goes as expected. The best possible forecast can still fail. This is why we have backup and alternatives plans. It’s what UPS likes to call a flexible and responsive supply chain.
It’s important to:
- Investigate time-definite transportation alternatives for shortening lead times.
- Be sure you have the flexibility to obtain alternate supplies and a time-sensitive service capability to deliver them.
- Confirm that you are working with vendors/partners/carriers that are flexible.
- Plan ahead for contingencies.
If you would like more information about designing your demand planning forecast, please contact us
