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During the current pandemic and subsequent demand disruption, we are preoccupied with understanding current consumer behavior and short-term demand. But equally as important is the longer-term picture. In this article I present a framework for understanding how demand for different products will shift, both as we exit this crisis and for the year ahead. I use a categorization system based on product needs, revealing how consumer behavior now and going forward will impact your demand forecasts.
As Covid-19 abates and we emerge from lockdown, businesses are reopening amid an entirely different set of circumstances. Volatility will be around for a while, and supply chains must react accordingly, with specific functions needing to reassess how they add value in this new environment, and what their day-to-day operations should be. Here I present recommendations for supply chain functions to mitigate risk and ensure efficiency going forward based on the 3 V’s: Visibility, Velocity, and Variability.
Since the e-commerce market is growing by leaps and bounds, companies need a dedicated team within the S&OP process to take advantage of it. It is a different animal and requires a different skillset and strategy to manage and grow demand. It presents major challenges and has already damaged brick-and-mortar retailers, as well as a host of different industries—publishing being a prime example. At the same time, it has provided many new opportunities to grow demand via target and subscription-based marketing.
This article asserts that standard integrated planning implementation requires three generic templates: a process model, a transformation framework, and an information systems roadmap. It makes the case for S&OP and IBP program managers to tailor these templates to their own organizations in order to assess current capabilities and guide the next phase of their business transformation. The results of implementation are improvements in financial results and key performance indicators.
This article describes the various steps that General Motors has taken to improve forecasts for better decision making. These include reducing waste, using consistent methods and data each time to see what is working and what is not, employing more statistical tools and less judgment, and encouraging employees to share their learning with others. The forecasting team was also encouraged to constructively challenge analysis rather than accept anything at face value. Above all, the initiatives created a culture where senior leaders became champions of our forecasting efforts.
Recent changes in Big Data and analytics are having a huge impact on the culture and organizational structure of demand planning, forecasting and related roles. Whilst most companies have recognized this, we still need a blueprint of what this new organization may look like and how we get there. This article discusses a new way to optimize the skills and responsibilities of these specialized functions and the steps you need to take based on your organization’s maturity. Additionally, for professionals who work in these fields or who are about to enter, this article discusses the types of career paths that can help maximize abilities and fulfill aspirations.
This article, which focuses on current demand management and S&OP practices, discusses expected changes in the next five to seven years in the areas of data management, omni-channel distribution, direct to consumer (D2C) delivery model, and online commerce. It throws light on the current and future framework of S&OP regarding its structure, process, planning frequency, and horizon. It also highlights the challenges that we will face with respect to people, process, and technology, as well as opportunities that lie ahead.
This article presents the opportunities for demand planning and associated functions as supply chain digitalization emerges, and the challenges associated with fully realizing its benefits at the enterprise level, for example, through enhanced Integrated Business Planning (IBP). It introduces a change approach, based on the Tipping Point insights and principles explored by Malcolm Gladwell that provide some practical illustrations of how this approach can be applied to support change programs in this field.
As forecasters, we continue to look ahead and, to the best of our ability, try to determine what is next. It is only fitting that together we take this view into the next decade, and look at what changes may be on the horizon in our own industry and in the field of forecasting and demand planning. This article, using results from a recent survey of the future of forecasting and demand planning, looks at how people in the field feel about where we are heading, and how we may need to adapt to the next generation of demand planning.
This column discusses outsourcing a business forecasting process to external consultants. It starts by covering the functions that might be reasonably outsourced. It recommends that all collaborative-related functions reside inside the walls of a company, while quantitative and computer system capabilities might be outsourced. However, there are risks involved in having demand forecasts reside outside the protection of a company’s firewalls.
It is very important that the senior management team supports Sales & Operations Planning (S&OP) in its broadest sense. But what does that mean and what in particular does it require? What does it take to not only get S&OP over the line but also nurture it and improve its effectiveness over time? Many experts and practitioners know and have documented that executing and sustaining a high-quality S&OP process is a challenging task that requires thoughtful design of any deployment program. Based on years of experience in deploying S&OP globally, this article presents four key practical foundations for success: cross-functional C-Suite sponsorship, senior enterprise leadership, S&OP team leadership and setup, and hands-on coaching and mentoring. With these four critical elements, I hope I can provide some new insights and learnings both for the supply chain function and all those involved in making S&OP work.
Establishing process governance is critical for extracting value from demand planning practices. An important step in the journey towards robust governance is the assignment of a Demand Planning Business Process Owner (BPO). Such a role can add value to an organization by driving process standardization, and by leading transformational efforts involving processes, tools, and organization. BPOs must possess a mix of competencies that balance soft skills with technical and analytical ones. Goodyear Tire & Rubber is one company that has been making use of Demand Planning BPOs.
Consumers have been gaining power and control over the purchasing process, as well as driving new buying experiences. Unprecedented amounts of information and new digital technologies have enabled this control over retailers and manufacturers. As a result, consumers are turning increasingly to technology to help make purchase decisions. Companies are addressing some of these issues by improving alignment between different functional units, introducing advanced “analytics,” and taking an omnichannel agnostic approach to inventory and distribution. Shorter product life cycles, expanding assortments, multiple channels, and frequent price and sales promotions compound the challenges companies are experiencing due to the disruptions created by IoT, mobile devices, predictive analytics, and cloud computing. Companies will need to invest in new Omnichannel Demand Planning and Optimization technology that focuses on capturing customer preferences for where, how, and when customers/consumers want to shop, as well as sensing customer demand across all channels within the particular trade area in which they shop.
S&OP has served business leaders over the past 20 years to make timely decisions about balancing sales (demand) with supply (manufacturing capacity and inventory) with the focus primarily on plan, source, make, and deliver a product or service to consumers. In the next 10 years, how consumers shop and receive goods will transform endto- end supply planning, the decisions business leaders will need to make, and how those decisions are made.
Nearly every S&OP success story speaks of engagement by the executive team as a core element of the implementation. It is universally accepted as one of the most important precursors of positive results. “Lead from the top” is a common S&OP axiom, yet the expression “executive engagement” is often nothing more than a vague utterance—offered like a solution unto itself. It assumes the listener already knows the meaning of the expression. And in my experience, the one guaranteed way to make something utterly useless is to leave it painfully vague.