IndustryWeek recently published an article entitled “Demand Planning: A Game of Chance or Strategy?“ A couple of things jump out when reading this article.
- Need for better customer collaboration – They key to getting better forecast accuracy is to really understand your customer. For vendors, it’s the customer who holds the trump card … they are the ones who control what ultimately is going to happen (i.e. they are the ones that are selling your product). As a vendor you have to get into their heads and understand their business – who they sell to; how much they sell to their customers; how much you sell to them; what forecasting bias do they have; etc. It’s only by collaborating with your customer will you be able to understand them. Granted the unexpected will always happen, so having a good process in place to respond effectively and efficiently is important as well.
- Need to break down the silos – far too often things are flung over the wall for someone else to “deal with”. For example, forecasts are flung over to the master schedulers to make happen, inventory policies are set by the inventory management group … seems tough to figure out how this type of execution can ever work. Groups need to get together and coordinate their activities.
- Need to measure – it’s well and good to drive to the best forecast while respecting inventory policies; you have to take various measurements. For example, measuring forecast accuracy for each customer on a continuous basis allows you to adjust their forecast. In other words, it will give you a sense of their forecast bias.
Is our e-mail centric world the cause of not communicating with one another? Are we now simply content to say “I sent you an email”? Email is a great collaboration tool … the ability to communicate globally 24×7 has really extended a vendors reach. But in the end this is about collaboration – the ability to get together and solve issues … it’s not about sending something over the wall. Applications that integrate demand data, supply data and product data into a single instance and provide views that are specific for each of the groups will allow for far better collaboration – resulting in better customer satisfaction.
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Tags: Collaboration, Demand planning, Inventory
Posted in Demand management
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I second the opinion shared in this blog. As a supply chain practioner for past several years and having been involved in multiple demand planning projects, I gather that the key to a successful DP is not the statistical firepower of your tool, but the strong workflow to forecasting involving all important stakeholders in the process. It is also crucial to be able to measure accuracy of the forecast and mobilize the supply in the network to an ever-changing demand pattern. In one of my blogs,(http://infosysblogs.com/supply-chain/2008/09/the_right_level_for_measuring_1.html), I have emphasized on some softer aspects of forecasting and how the tool can be leveraged to layout a self-sustainable and self-evolving forecast process.