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The Other ‘F’ Word: Demand Sensing Implementation

By aim10x|

We have all gained valuable learnings by trying, failing, improving; and trying, failing, and improving again. But what if we make those learnings transparent, exchanging the precious lessons so we don’t make the same mistakes again? 10 Senior supply chain leaders got together on Oct 4th, 2021 to dive deeper into things we can all learn from implementing advanced planning projects, including their experiences on Demand Sensing Implementation. For those who missed the session, below is a summary we’ve put together for you.

*For privacy reasons, we do not mention anyone’s name without consent. Learnings included in this article are collectively contributed by all attendees during the event.

For issues with short-term forecast accuracy, demand sensing was chosen as the solution and main driver for improving service level and cost reduction. The aim was to forecast in days as opposed to weeks, with greater agility and faster response backed by granular detail. Swathes of data could be digested rapidly to provide actionable insights.

“So this data is not something new for you, you have it, maybe your planners even take it into account, but it’s on such a level of granularity that the human brain cannot derive anything from this data. Demand sensing is advanced pattern recognition technology using ML and AI. This technology identifies information from this huge amount of data and tries to predict what in the end, the customer will order and using all that improving this short term forecast on the most granular level.” (Elena Gorbunova)

So, what are the failures and learnings from Demand Sensing implementation?

Choose the Best Tool, Not the Cheapest

Customers of today demand shorter lead times, greater variety and availability, and new and exciting products all of the time. This means pressure builds quickly on the companies producing the goods. Therefore, there is an inclination to choose a tool fast in order to keep up with these rapidly changing appetites of customers, all the while attempting to create efficient and accurate demand plans. However, rushing into it can prove to be disastrous. Companies must perform numerous pilots and do proper due diligence – dip the toe in before cannonballing into the deep end.

Selecting a solution provider is vital in the trust-building process. What learnings were taken from the selection process?

  • Don’t prioritize price. Cheap solutions are cheap for a reason.
  • Be wary of decision-making based on supplier’s PowerPoint presentations; this is an outdated mode of data collection and analysis. Get with the times.
  • Multiple pilots of smaller scope allow for implementation competition and comparison.
  • Place importance on the tool’s end-to-end capabilities and analytics. Make sure they are already built-in or you can implement the tool and spend too much time building something on top of it.
  • Perform a POC with more than one supplier in the real or test system.

Understand Business Complexity and Diversity

Demand sensing allows companies to proactively adapt your supply chain planning depending on country and time. For example, St. Patrick’s Day in Chicago will need greater deliveries of Guinness, or Koningsdag in Amsterdam will require more orange flags, in sweltering weather Gatorade will need to deliver more cases to New York city or on a cold December day, Starbucks will need plenty of ingredients for hot cocoa. Demand sensing understands upcoming weather, events, and trends to increase the accuracy of forecasts.

The company making the solution provider selection has to always remind themselves when entering different markets or countries that all are unique in their own ways. When engaging with new markets, ensure to do pilots in multiple countries, for example, one experiencing socio-economic volatility, one living with market stability, and one a mixed bag. This allows your company to get good scope during implementation. Different companies take longer to get on board and patience and persistence are vital in the implementation process.

Finding Value in the Business Case

Making a business case for demand sensing can be an arduous endeavour, but it is vital in convincing the upper management that the project is worth it and will bring great benefits.
Key lessons learned early in the implementation process were important pockets of value:

  • Go-live only when all needed prescriptive reports are available.
  • This increases trust and decreases the fear of new technology.
  • Set clear measurable country-specific KPIs based on potential from the start.
  • Decrease inventory hoarded from over forecasting.
  • ABC XYZ analysis

You Have to Trust the Tool

Fully embracing a solution tool means old processes are completely flipped on their head as technology takes the reins of demand and planning. This means that change management and change psychology is vital as many demand planning teams are mature and experienced in the methods of the past. The challenge is to shake free from the shackles of historical data and bring everyone with you together. Planners have to give up some of their control in order to embrace change and fuse their process with technology. They have to trust the tool. If planners are reluctant and want to remain in the familiar then stumbling blocks begin to appear and block off any progress. In the absence of trust in the forecast, nothing will move forward.

Keeping the flame lit in change management is important to trust. There are two recommended methods to do this in the post-implementation process:
1. Spread out your leaders by forming strong regional partnerships. This will allow you to have greater influence across provincial borders so favoritism doesn’t cause an absence of trust. Communicating in a localized way is vital – the granular over the general. Some things don’t translate across borders and some aspects to one client are futile, while to others they are critical.
2. Gamification is a great tactic. It develops a healthy level of competition amongst planners and further incentify users to start getting more value out of the new tool, sooner. This often boosts user adoption and continues to build trust by delivering results.

These lessons were learned through trying and trying again, failing again, failing better, and finding out the right course of action. Always remember the ‘F’ word – Failure – is important and inevitable in your journey towards success.

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