New research from Aberdeen (available here) points to the growing need for improved demand management in discrete industries. The research identifies a variety of pressures that are forcing companies to focus on improving their demand management capabilities, including: rising customer service expectations, global supply chains resulting in increased lead-times, volatile market resulting in high uncertainty in demand, need to utilize expensive assets with maximum efficiency, pressure from stockholders to reduce inventory and competition from global brands.
The research also finds that Best-in-Class companies are 2.5-times more likely than all others to have a clear owner of the consensus forecast. In discrete industries, the sales inventory and operations planning process is gaining foothold. The owner of the consensus forecast thus then is the same as the S&OP process owner. This is an important trend because in the past there has been very limited attention paid towards balancing supply, demand and inventory. The challenge is exacerbated due to multiple channels of selling products.
For too long companies purchased applications that were focused on a single issue - demand planning applications that focused strictly on gaining an accurate picture of demand and supply chain planning applications that focused on the creation of a supply plan to meet the demand plan. While planning plays a vital long-term role, as companies seek to become more demand-driven in light of the market forces that Aberdeen identifies, they face the reality that you can’t plan the customer. The premium then shifts to being able to respond to change as it occurs. To do so you need to empower people with the visibility and tools to quickly evaluate the impact of change and figure out what course corrections are required to balance supply, demand and inventory. Doing so requires an integrated view of all three – a view based on real operational data and not some model of the real world that prevents you from taking action based on an understanding of what’s possible and what the impact of your actions would be.
Demand management is increasingly the focus for companies seeking to become more demand-driven, and the defition of demand management is all about demand sensing, demand shaping and the ability to profitably respond to demand changes.