Trend 1 – Demand Planning Sets the Tone

As sources and capacities for manufacturing have increased, more companies
have moved away from focusing efforts on plant-level production planning and
are adopting more of a demand-driven focus of trying to influence and manage
demand more efficiently. Rationalizing what you are best at selling, making and
delivering, and aligning the sales force with that mindset, is critical to adopting a
demand-driven model. The demand-driven approach can help a company create
a more customer-focused mindset, without sacrificing operational efficiency.
Ultimately a demand-focused approach to planning can significantly improve
demand planning and management efforts and help overall costs and customer
service efforts.

Advanced demand planning systems and proper strategies can also help uncover
data and identify trends buried in a company’s information systems. We encourage
companies to conduct an enterprise-wide internal Demand Review to gather
information from all aspects of the organization.

Goals are then set to gain consensus on what will be sold each month for each
product line or category and the resulting revenue. Of course, the driver of the
Demand Review process is continuous improvement of forecast accuracy.
Critical to the success of any Demand Plan is having all stakeholders, including
sales, marketing, finance, product development and supply chain agree upon a consensus Demand Plan.

It is important for all participants to discuss factors affecting
customer demand patterns, such as new or deleted products, competitors or market
conditions, the aggregate demand plans and associated revenue plans. Once all
demand for products and services is recognized, the information is consolidated
into one Demand Plan.

Demand Planning is a key input to the larger Sales and Operations Planning process
and can have a significant positive impact on new product introductions, inventory
planning and management, customer service, supply planning efficiency and sourcing
strategies. With our clients, we have often seen that Demand Planning success is
often tied to organizational structure. We have found that companies with dedicated
resources focused around demand planning and forecasting yield stronger results
and drive more value to their company. Organizations that focus part time on demand
planning and forecasting efforts yield substandard results. With the strategic importance
of Demand Planning, companies need to be committed to this from both a resource
and technology perspective.

Above piece extracted from www.hitachiconsulting.com

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