Demand Planning & Management Overview
Five Elements of Demand Management Strategy
- Demand forecasting: Organizations should look at sales forecasts, marketing plans, and downstream deman data, not just the historical sales activity. Machine learning and pattern recognition can help complete not just look at the historical sales activity, but also with innovative signs, such as sales forecasts or marketing plans, and downstream demand data, such as retail point of sale or channel sales data. However, the data mentioned above is often incomplete, and pattern recognition and machine learning can help predict the missing values.
- Demand planning: Using more accurate and appropriate data, companies can increase the frequency of forecasts which will improve their demand planning. Sales and operations planning should look at multiple forecasts before deciding on a consensus demand plan. Mature demand planning processes will also provide models for segmented channels.
- Demand sensing: In today's economy, real-time "sensing" of demand has replaced demand forecasts that are based on rules in the B2C world because of online ordering. Companies are seeking to have a better visibility of the demand by looking at the indirect wholesale and distribution channels, allowing demand sensing to be applied to the industrial business-to-business market. The technologies associated with demand sensing are now including simulation and optimization strategies that allow companies help with midterm planning.
- Demand shaping: Demand shaping includes programs and capabilities such as price management, new product launches, and promotions to increase demand or profitability for products and services. Best practices involve synchronizing supply strategies with demand and product management decisions through processes like S&OP.
- Demand fulfillment: In order to meet the demand, companies must differentiate demand fulfillment processes to make accommodations for different products, customers, and channels. For example, certain defined segments or combinations may require certain models, while others will require a different fulfillment technique.
Every company has demand management capabilities scattered somewhere throughout their organization, but they are often distributed across multiple teams and roles. Companies need to design a platform what connects the capabilities to create a rational response to customer demand in order to become better at demand management.