Effective demand management keeps your customers happy. After all demand planning is defined as “the process of forecasting the demand for a product or service so it can be produced and delivered more efficiently and to the satisfaction of customers.” Now that is easier said than done. Consider these 6 trends that are seriously affecting your demand planning efforts and effectiveness in 2020.
1. Global Volatility
Our world is more and more like one global village, with increasing interdependencies. Government coups, assassinations and terrorist attacks are nearly commonplace. Global markets are impacted by events like viruses, Brexit, trade wars and tensions in the Middle East.
The outbreak of the Coronavirus in the Wuhan province of China spread into a global pandemic. The virus has shaken financial markets and supply chains arounf the world. Central banks have slashed interest rates (some below zero!) and are supporting credit markets with liquidity. In the US, a historically large financial stimulus bill is adding to the country's record deficit.
The US/Iran crisis seems to have dissipated for now, but the conflict in Syria continues to destabilize the region. Furthermore, President Trump’s proposed peace plan seems to have only escalated tensions between Israel and Palestine.
Some countries embrace global connectivity, while others fear its risks. One thing is for sure, what impacts one region is more likely than ever to impact another.
2. Triple P: People, Planet and Profit Requirements
Besides controlling a healthy topline and bottom line, companies around the world are under increased pressure to reduce their carbon footprint and respect the rights and welfare of people up and down the value chain. In the eyes of many, corporations need to look beyond profit and also do good in their communities and the world.
Public opinion can turn sour quickly over products harmful to the environment, workers’ rights not respected, or value chains deemed harmful to people and the planet. Demand can take a nosedive fast and unexpectedly.
With companies seeking to comply with one or more of the 17 United Nations SDGs (Sustainable Development Goals), so do they need to control their value chain in a more integral fashion too. Any company’s social and ecological footprint consists of the sum of individual suppliers’ and customers’ footprint. Actively controlling and reducing the joint footprint up and down the value chain requires to take a broader perspective at the entire value chain.
According to some thought leaders in business and sustainability, the very perspective of a value chain should shift from a linear value ‘chain’ to a more cyclical value ‘cycle’. That value cycle puts more emphasis on reducing waste as much as possible or doing away with waste altogether. The monitoring, controlling and reporting of supply and demand across the value chain requires companies to improve their demand planning and demand sensing capabilities.
3. Holistic, Cross-Functional Demand Planning
The trend is moving in the direction of an ever more integral, holistic perspective on demand planning. The demand planning function at many companies is still too siloed. Too often, we encounter demand planning teams that are only focused on department-centric number crunching. Demand planners need to see themselves as strategic business partners to all aspects of the organization.
For many organizations, developing cross-functional demand planning is a huge challenge. Teams and business units are often still operating out of unshared spreadsheets. Other groups are not working off the same data, information and insights. Sales may run its version of the truth, while operations have their own version and purchasing yet again having their own version of the truth.
It’s imperative to break down the information silos caused by using departmental spreadsheets and point solutions. All teams and disciplines should be running the business based on the same data and information. This can be achieved through technology and business processes.
4. Crunching the Numbers: Outgrowing Excel
While big data, predictive analytics and AI are almost cliché buzzwords nowadays, there is no denying that data-driven businesses own and grow their position in the market. When the business’ foundation is solid when it comes to people, processes and tooling, a company’s demand planning function may want to leverage big data to their advantage.
Using simple and often dispersed sets of spreadsheets simply isn’t enough anymore. Over are the days where a professional medium-sized company can still rely on Bill Gates’ spreadsheet solution alone. This is the moment to ramp up the tooling available to the demand planning function. The selection and implementation thereof ideally should be done in an organic, step-by-step fashion. John Galt very much believes in an incremental approach to deploying demand planning technology.
5. Proactive, 360-Degree Sensing Demand Planning
Supply chains have traditionally been more reactive than proactive. In today’s marketplace, the ability of your supply chain to adapt to demand changes is more complicated than responding to implicit or explicit order data. The reactive paradigm fails in the face of demand volatility. And the likelihood of that volatility occurring is increasing in most verticals. Nowadays the wants and needs of customers in both B2C and B2B spaces are changing more rapidly and supply chains that cannot keep up with them will suffer, if not perish.
Successful supply chains (or ‘supply cycles’) are able to adapt by eliminating bias and building systems that can proactively sense demand from a 360-degree perspective and then intelligently move with demand in a permanent state of flux. Such a system needs to be designed from an outside-in perspective. It includes sensing channel demand, using optimization to actively shape demand and applying advanced analytics to drive a more intelligent answer that is robust for the short-, medium- and longer-term.
6. Higher Technological Demands on Demand Planning: IoT, Blockchain, Big Data, Bots
The average complexity level of supply chains is likely to go up due to technological advances rapidly becoming the norm. Think for instance of the Internet of Things, the realtime tracking and tracing of goods and service, drone delivery and the use of autonomous vehicles used in the final stage of the value chain.
There is also the rise of robots that can be used in order picking and fulfilment. Or the applications of bots in customer care and marketing. And then there is the rise of 3D printing, which may make traditional, long linear supply chains obsolete quicker than one might have anticipated.
All these technological advances will become hygiene factors relatively soon. They will therefore have to be integrated and supported by the demand planning function too (rather than left as a ‘to do’ on some future roadmap!).
Can you afford to consider your demand planning a done deal? Probably not. While there is much value to be had in implementing a fully-AI enabled demand planning solution, there’s a lot you can do before taking that leap.
Schedule a free consultation with one of our Demand Planning Xperts to learn more about how using our Atlas Planning and ForecastX solutions will prepare you for the trends and challenges you just read about.
About John Galt Solutions
More than ever, companies must be able to sense and respond to the dynamics of a complex supply chain. John Galt's Atlas Planning is a unified end-to-end supply chain planning platform that helps you increase forecast accuracy, optimize inventory levels and maximize supply chain performance. Since its founding in 1996, John Galt Solutions has built a proven track record of providing affordable, automated demand and inventory management services for consumer-driven supply chains. We have an unmatched ability to configure tailored solutions for customers, regardless of size, industry, or business challenge, that save both time and money by compressing implementation periods and delivering intelligent information that positively impact your bottom line.