Demand planning is a multi-step operational supply chain management (SCM)

process used to create reliable forecasts. Effective demand planning can

guide users to improve the accuracy of revenue forecasts, align inventory
levels with peaks and troughs in demand, and enhance profitability for a given
channel or product.
The approach begins with a statistical forecast. Data sources for the forecast
include planned sales orders, customer contracts and intercompany standing
orders. The final forecast is shared with key stakeholders, such as suppliers.
Key steps in demand planning include:
Importing historical sales data
Creating statistical forecasts
Importing customer forecasts
Collaborating with customers
Managing forecasts
Building consensus forecasts
Supply and demand collaboration
Securing constrained forecasts
Confirmation with customers
Reexamining data and adjusting planning accordingly.
22 minutes ago Sent from Web

Paul John Tenorio

Customer Demand Planning (CDP) is a business-planning process that
enables sales teams to develop demand forecasts as input to serviceplanning processes, production, inventory planning and revenue planning.[1]
21 minutes ago Sent from Web

Paul John Tenorio

CDP is an important aspect of managing value chains. Generally, the first step
of CDP is to forecast product demand. A manager can plan resource
deployment in accordance with the resulting forecasts. It's a bottom-up

approach vs. top down planning. Associated risks with this method are: Low
forecast accuracy and numbers of planners required. There are various
software systems created by companies such as Dynasys, Avercast, Demand
Solutions, RightChain TM, SAS System, Agentrics, Manugistics, Oracle,
Petrolsoft Corporation (now Aspen Technology), StatSoft, ToolsGroup and
GMDH Shell that help businesses forecast demand and plan operations. To
test the added value of implementing bottom-up approach, SAP APO
applications are providing simulations functionalities to estimate the resulting
Demand Forecast Accuracy (e.g. POS sales ; Sales invoices ; shipments,
etc.)
In the manufacturer to retailer model, customer collaborative partnerships
have been become more common since the 1990s. Although there was a lot
of industry support behind CPFR (Collaborative Planning, Forecasting and
Replenishment), manufacturers and retailers are adopting different versions of
collaborative forecasting and replenishment strategies. These include
Collaborative-VMI, CPFR, Account Based Forecasting, CMI, Shared Single
Forecast and replenishment etc.
The Demand management in the 21st Century is a more complete view of the
business. Demand Management is not merely forecasting. Demand
management strives to manage all the activities associated with discovering
markets, planning products or services for those markets and then fulfilling the
customers demand. It is an integrative set of processes across, not just the
enterprise, but the trade partner network. Do you really understand your
market? Are you sure you know who your customer is and what draws them to
your business? And when they get there are they actually happy with your
assortmentyour product offering and service? And even if they buy, are you
getting the wallet share you could be getting? These are profound questions
for any business.
Most businesses think they can answer the first question, somewhat. They
have a characterization of their customer, an archetype, a segmentation
model that describes their customer base. But when you probe further into
even the best firms, they admit that these models are often insufficiently
mapped to the actual customers who spend with them. And they have few
programs, if any to access those who don't spend but could be spending.
20 minutes ago Sent from Web

Paul John Tenorio

Effective demand planning doesnt just happen, it requires work. To move
forward, companies have to admit the mistakes of the past, implement

continuous improvement programs to drive discipline, and carefully reimplement demand planning technologies.
19 minutes ago Sent from Web

Paul John Tenorio

Within most organizations, the words demand planning cause a reaction
and typically not a mild one. It is characterized by emotional extremes like
anger, despair, disillusionment, or even hopelessness.
Seldom do we find a team excited or optimistic about their chances to improve
demand planning processes.
After two decades of process and technology refinement, excellence in
demand management still eludes supply chain teams. In fact, it is the supply
chain planning application with the greatest gap between performance and
satisfaction. At the same time, its the application with the greatest planned
future spending.
For most teams, demand planning is a conundrum, a true love-hate
relationship. They want to improve the demand planning process, but remain
skeptical that they can ever do so.
In our research at Supply Chain Insights, we find that demand planning is the
most misunderstoodand most frustratingof any supply chain planning
application. While companies are the most satisfied with warehouse and
transportation management, they are the least satisfied with demand
planning.
Teams are also confused about the demand planning process. They are
unclear on how to move forward. What drives process excellence is not clear.
And well-intentioned consultants brought in to help achieve that clarity often
give bad advice.
In this article, we share insights on the current state of demand planning and
give actionable advice that supply chain teams can implement to make real
improvements.
Getting Past the Plateau
The first use of the term supply chain management in the commercial sector
was in 1982. Until that time, the focus of organizational improvement was on
specific functional areas such as manufacturing, procurement, or logistics.

This siloed approach gradually gave way to more integrated operations,

which lead to the concepts of demand planning and integrated supply chain
planning.
In this article, demand planning is defined as the use of analyticsoptimization, text mining, and collaborative workflowto use market signals (channel
sales, customer orders, customer shipments, or market indicators) to predict
future demand patterns.
This forward period for demand planning will vary by company, but it is a
tactical planning process typically stretching across the period of 10 months to
18 months.
Note that as companies mature, the use of the forecast becomes more
comprehensive and is woven into a number of processes culminating in a
more holistic end-to-end process termed demand management. (We discuss
this more fully in the article Concepts of Demand Management)
The first demand planning applications were introduced late in the 1980s.
Today, there is a conventional view that as these applications evolved,
companies have steadily reduced costs, improved inventories, and sped time
to market.
The actual balance sheet results, however, show the opposite. Too few supply
chain teams have successfully posted improvements to their balance sheets
through demand planning initiatives.
Improvements were made in specific projects and in isolated parts of the
business, but progress has slowed over the last 10 years resulting in a supply
chain plateau. Growth has been slowing, inventories climbing, and costs
escalating.
Getting the basics right in the demand planning process is essential to moving
supply chain results past the current plateau. However, too few companies
know what to do or how to do it.