With so many levers moving at once, managing demand requires a sophisticated approach by an expert who can turn data and insights into sound decisions.
When a business experiences problems like excess inventory bottlenecks or losing customers to competitors due to churn, supply chain demand planning is the antidote.
As a leading provider of on-demand staffing, Aida understands how forecasting demand is fundamental in many industries, especially those in the supply chain network. When you recruit a demand planner, you can expect happy customers, optimized inventory, and maximum revenue. This article explains what demand forecasting is and why you should consider enlisting a demand planner.
What is Demand Management?
What is demand management and how does it relate to demand planning? Demand management is defined as a planning methodology that helps an organization forecast, plan for and manage demand for its products and services. The core components of demand management are forecasting, supply planning, demand analysis, and sales planning, and operations planning.
Demand management is effective when it includes a closed-loop structure. This means that the outcome of demand planning is fed back into modification considerations after patterns are formed
What Does a Demand Planner Do?
If you’re hearing these terms for the first time, you might be wondering, “What does a demand planner do?” The demand planner is both at the helm of the planning process and serves as a pillar of logistic efficiency (supply planning, inventory optimization, distribution, etc.). A demand planner uses pricing and predictive models to forecast demand.
What is demand planning? Surplus and discarded inventory are accounted for by the demand planner’s inventory management. They are responsible for data analysis, monitoring forecasts, accurate reporting, and communicating their findings to several stakeholders.
Demand planners are strategists who work inter-departmentally to track all the factors contributing to demand forecasts and recommend the best corrective actions. Responsibilities include:
- Tracking industry trends and demand patterns so that effective forecast models are developed.
- Advise management stakeholders on risk assessments or mitigation efforts.
- Improve demand forecast accuracy by identifying and implementing improvement opportunities.
- Effectively communicate the estimation and ramifications of forecast and inventory to key stakeholders.
- Track changes in sales forecasts, budgets, and business strategies and report what is noteworthy.
- Perform monthly forecast maintenance.
- Provide timely and effective response to any demand-related issues.
A demand planner shepherds stakeholders through decisions that affect the health and prosperity of the business.
Oversees Product Lifecycle
A product portfolio is an ecosystem where product lines and categories are both interconnected and interdependent. A demand planner plays a role in how new products integrate into the product family, if new products are needed to make existing products work better, and if new products would result in cannibalization.
A few of the objectives of product portfolio management are maximizing profits among product lines, increasing market share, and competitive gains. With smart product portfolio management initiatives, feasibility models integrate with ideation processes, profitability models spur from scenarios introduced, and concepts materialize at an accelerated pace.
Statistical Forecasting Using Historical Data
Historical data is a fundamental factor with demand planning (as with the SAP demand planner). Typically, multiple advanced algorithms are taken into account including primary and secondary data. Primary data is collected directly from analysts and researchers. Secondary data consists of past performance such as historical sales trends and financial reports.
A demand planner is the architect of an intricate methodology used to predict future demand and supply chain movement. This is how organizations can avoid stock-outs and overstocks that impact revenue.
Seasonality is a major factor, particularly in the retail space. Holiday spending and weather patterns create spikes in demand for specific categories of products and those who are well prepared with inventory will make the profits.
Manage Inventory Allocation
Product portfolio management also relies on the evaluation of demand volume and variance. A team effort is put into the decision about whether to stock the product and how to ensure availability when it is stocked. Marketing and sales teams are key stakeholders in this process, as they help move inventory and report back on poor-performing products.
Inventory levels must be tracked for restocking decisions to be made over time. The demand planner engineers coordinate between products with normal demand patterns, slow-moving inventory, and surplus stock. A demand planner is successful when a company meets customer demand on-demand, and does not incur excessive inventory.
Monitor Demand Forecasts
Demand planners are also responsible for quality control and oversight of their own work. While the accuracy of a forecast is one performance indicator, this qualitative measurement must be evaluated in the context of the bigger picture. Monitoring demand forecasts over time allow for continuous refinement of the demand planning process.
For this reason, the demand planner should be agile, possess a solid understanding of business operations, keep specific business goals in mind, and have exceptional data analysis acumen. Using their best judgment, they must decide what impact the accuracy of the forecast has on the overall operations and make adjustments accordingly. Other factors that may have had more influence on the outcome must be considered apart from the forecast itself.
Collaborate with Business Leads and Partners
As mentioned earlier, the process of demand planning involves several stakeholders. For this reason, the demand planner must also be skilled in collaboration and communication. Collaboration involves upstream and downstream interaction. Upstream includes engagement with sales, marketing, finance, sourcing, and manufacturing teams. Downstream involves coordinating with those who manage inventory and are involved with the product life cycle.
Demand planners are a bridge between sales and operations verticals. They meet with different stakeholders and must be able to extract the necessary information from each department and communicate recommendations effectively so each will make informed decisions.
Does Your Business Need a Demand Planner?
If we’ve learned anything from 2020, we now realize that the conditions of the global supply chain are volatile and will require agility from here on out. Many factors impact changes in demand such as labor force fluctuations, economic shifts, natural disasters, or global crises (think COVID-19).
Demand planners are a bridge between the areas of sales and supply chain operations verticals. They meet with many different stakeholders and must be able to extract the necessary information from each department and communicate recommendations in ways that aid them in making decisions that benefit the bottom line.
Both product or service sectors benefit from demand planning. A talented demand planner can resolve a variety of problems modern businesses encounter. If your operations are experiencing any of the following symptoms, you likely stand to benefit from adding a demand planner to your operations team.
- Growing inventory expenses.
- Increased stockouts
- Excess inventory
- Obsolete product stock
- Customer dissatisfaction or churn.
- Expensive or slow shipping.
- Competitors getting better prices from suppliers.
- Outdated or defunct operations models.
- A series of missed opportunities and stagnation.
- Losing ground competitively
A demand planner optimizes operations with recommendations based on historical data and future projections. While inventory management is a key function of the demand planner, their efforts provide other advantages. An effective demand planner cuts waste and expenses, increases customer satisfaction, keeps your business competitive, and improves operations at multiple levels (including logistics optimization).
What Makes a Good Demand Planner?
When recruiting a demand planner, there are certain characteristics and skill sets you’ll be looking for to ensure the person you hire will be effective in this role. It takes time to build the business expertise and insight needed to manage all the aspects of this role.
A demand planner is not only comfortable with analytics but also has a knack for understanding how it all connects and can parse what the data says about the future. They must also possess sound judgment. Demand planners must be able to know when something isn’t working and be agile in response to shifts (forward-thinking).
Aside from analytical prowess, a data planner must also be able to communicate effectively with all stakeholders. This involves asking intelligent questions, understanding where each person is coming from, gathering all the necessary information from each interaction, and influencing the decision-making of others with sensible recommendations.
Need Help Hiring a Demand Planner for Your Team?
Adia not only uses a demand planning process in our own operations, but we also support supply planning for our clients with on-demand staffing. We help businesses in need connect with the talent they need at any level from temporary workers for warehouse operations to operations administrators.
Adia saves you time and hassle by connecting you with a professional demand planner who has the experience and the expertise it takes to make much-needed operational improvements. Contact Adia today so we can help you secure the right person for the job!