What is the role of demand planning in Logistics? Examples of demand management in a business with a large product portfolio.
HOW CAN IT HELP RESOLVE THE KEY ISSUES IN DEMAND MANAGEMENT?
What are the key challenges and potential pitfalls with demand management?
What are the key challenges and potential pitfalls with demand management?
Over the past 15 years, supply chains have become more elongated than ever before, with the decline of local manufacturing in many developed economies and its migration to lower cost economies in Asia and other developing countries. Today, supply chains are being stretched out and in extreme cases, can be 8-12 weeks in length, so getting demand and forecasts right is absolutely critical.
This also makes demand management more challenging and complicated, because it’s not possible to adjust manufacturing output easily in the short term to accommodate unexpected demand peaks and troughs. Companies that integrate their forecasting and demand management tools with existing supply chain and logistics systems can reap massive rewards as a result, and see huge increases in efficiency and customer satisfaction.
Forecasting is a key area where many companies fall down and I would estimate that 80% of companies get their forecasts wrong 80% of the time. And while most companies expend a lot of their effort creating a meaningful forecast, they tend not to measure its real world accuracy. To mitigate this, they really need to conduct something like a post mortem each time, to understand what worked when and, if things went wrong, the reasons why.
There are a myriad of world class forecasting and planning tools on the market but far too many business still rely on paper, people’s knowledge and use of a spread sheet. For example, Indigo has experience of working with blue chip companies who still rely on spread sheets for demand forecasting when they could be using specialist tools.
What’s the relationship between demand management and sales & operations planning?
Demand management and sales and operations planning are functions that are and should always be intrinsically linked to order fulfilment. Yet for many companies they are separate operations and often work in silos. For instance, they may be separate departments with a disparate relationship, when they should actually be a single unit under the remit of the supply chain manager.
Judit Dorda Sans
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