Who Does Demand Planning and How to Organize a Demand Planning Team
In this video, we discuss the who, what, where, and how of demand planning. We discuss the different roles involved in demand planning, how planners should be aligned, and whether they should be localized or centralized. We also discuss the skills and qualities that make a successful demand planner.
Demand planning is the process of forecasting future demand for products or services. It is an essential part of supply chain management, as it helps businesses to ensure that they have the right amount of inventory on hand to meet customer demand.
The demand planning process involves a number of different roles, including demand analysts, demand planners, and demand planning administrators. Demand analysts are responsible for generating the statistical forecast, while demand planners are responsible for incorporating business insights and making adjustments to the forecast. Demand planning administrators are responsible for managing the demand planning process and ensuring that it is running smoothly.
There are two main ways to organize demand planners: by product category or by customer channel. Planning by product category can help planners to become product experts, while planning by customer channel can help planners to become customer experts. The choice of planner alignment often depends on the organizational structure of the business.
Demand planners can be located either locally or centrally. Localized planners are closer to sales, marketing, and customers, while centralized planners can share data and expertise more efficiently. The best approach for a particular business will depend on its specific needs.
To be successful in demand planning, you need a combination of people with the right skills and qualities. Demand analysts need to have strong mathematical and programming skills, while demand planners need to have business acumen and the ability to build relationships. Both roles require a strong work ethic and the ability to work under pressure.
Who does Demand Planning and who is involved in the Demand Planning process? The inputs to Demand Planning come from different people and groups in a company. For example, sales provide customer inputs, marketing inform product direction and related events, product planning issue new and end of life product information and management provide plan approvals. Then there are the inputs from external resources, such as customers and partners.
The Demand Planning team is responsible for collating these inputs and creating a final consensus plan. Multiple roles are part of the Demand Planning team. The Demand Analyst is responsible for number generation and forecast model tuning, while Demand Planners bring the inputs together and drive the entire process from start to finish. They are responsible for the final consensus.
Both these roles are supported by a Demand Planning Administrator who was responsible for data validation and process orchestration. Globalisation, Demand Volatility, Omnichannels, Complex Distribution, Supply Chain Disruptions and Digital Transformations all mean that a Demand Planning team is increasingly pivotal for a competitive supply chain. Now, in the past, Demand Planners performed both statistical forecasting and consensus planning. They needed industry experience and statistical skills.
But with the huge increase of available data and the advent of machine learning, the best practice now is to evolve Demand Planning into two specific roles. The Demand Analyst with mathematical and programming skills to create and refine the statistical forecast. And the Demand Planner who can enrich the signal using industry insights, commercial inputs and creative problem solving capabilities. Another factor to consider is how the planners should be aligned.
For example, should they be organized by product categories or customer channels. Planning by product category could be due to manufacturing structure. And this enables planners to become product experts. Planning by channels could be due to a sales driven culture.
And this allows planners to become customer experts. The choice of planner alignment, then, is often defined by organizational structure, but it can be heavily influenced by tradition and whether Demand Planning rolls up into sales or manufacturing groups. Now let's look at the location of planners. Should they be localized or centralized?
Localized planning is when planners work separately from each other, such as in different countries or regions. Advantages are that planners are closer to sales, marketing and customers, with benefits of local language, culture and time zone and more efficient interaction with their supply chain. Disadvantages are that planners plan in entirely different ways, and peer learning is limited. Compiling all the forecast data is awkward and time consuming.
A centralized planning structure is when the Demand Planners work together in one location, although they may be more removed from sales and customers. They collect and analyze the data from each individual region as a whole to create the consolidated Demand Plan. These planners can work to a common process, and a central team like this can share data and expertise more efficiently. They can often create a more unbiased forecast.
However, the centralized approach will often struggle to react efficiently to changes in the local market. Local and central options can exist together. For example, consider a central team of demand analysts working on refining statistical methods and administrators keeping the system running. But with local planners in each country or site.
This approach works with the central team creating, refining and sharing the statistical forecast with individual regions. The regions then have their own local Demand Planning processes. In summary, to be successful in Demand Planning, you need a combination of people in the most suitable locations with a local or central, and with the right balance of skills of both scientist and artist. Demand Analysts using advanced mathematical skills and sophisticated programming tools are responsible for the forecast number generation.
While Demand Planners collect marketing knowledge, build relationships and use creativity to enrich and continually improve the consensus forecast.
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