Excellence in Demand Planning

Summary

In today's volatile business environment, demand planning is crucial for flexibility and responsiveness. A survey of 168 European companies reveals significant gaps in demand planning maturity, with many companies struggling to align their planning processes with market demands. Using a simplified fruit farmer example, the video highlights the importance of market collaboration, accurate forecasting methods, dedicated teams, and the right tools like demand planning software. Despite these needs, many businesses still rely on Excel and lack key performance indicators (KPIs) to measure success. Improving demand planning can lead to lower product stocks and higher customer satisfaction.

Takeaways

• 😀 Globalization, complexity, competition, and volatility are key market forces challenging supply chain management.
• 😀 Demand planning is crucial for achieving flexibility, responsiveness, and adaptability in today's volatile market.
• 😀 A survey with 168 companies in Europe shows significant room for improvement in aligning demand planning maturity with market requirements.
• 😀 The varying point approach combines planning complexity and maturity to enable higher business performance.
• 😀 A simplified example of a fruit farmer illustrates the importance of well-organized demand planning processes for success.
• 😀 The farmer’s success relies on collaboration with retailers and customers to ensure timely delivery of the right products in the right quantity.
• 😀 55% of companies do not receive market information in advance, which limits their ability to plan effectively.
• 😀 Many companies are not using the right methods for demand planning, with only 21% of respondents using statistical calculations based on external sources.
• 😀 Demand planning responsibility is often centralized, but only 25% of companies have a dedicated demand planning team.
• 😀 Surprisingly, 43% of companies still rely on Excel as their primary planning tool, which is not an ideal solution for complex demand planning.
• 😀 42% of companies do not use any KPIs to measure planning performance, which hinders their ability to improve forecast accuracy and overall planning efficiency.

Q & A

What are the four key market forces challenging today's demand planning?

The four key market forces are globalization, complexity, competition, and volatility.

How does demand planning contribute to business performance?

Demand planning contributes by increasing flexibility, responsiveness, and adaptability, which are crucial for businesses to manage market changes effectively.

What percentage of companies in Europe are not receiving market information in advance, according to the survey?

According to the survey, 55% of companies do not receive market information in advance.

What challenges do companies face in their demand planning processes?

Challenges include a lack of flexibility to accommodate ad hoc changes and the use of outdated or incorrect methods for forecasting and planning.

What does the example of the fruit farmer illustrate about demand planning?

The fruit farmer illustrates the need for proper planning processes to ensure that the right goods reach the market at the right time, considering factors like seasonality, environmental influences, and shelf life.

What is the most commonly used tool for demand planning in companies?

The most commonly used tool is Excel, with 43% of companies relying on it for their demand planning.

How do companies measure the success of their demand planning efforts?

Success is often measured through Key Performance Indicators (KPIs), though 42% of companies do not use any KPIs to measure performance.

What percentage of companies use KPIs to improve forecast accuracy?

26% of companies use KPIs to improve their forecast models.

How do statistical calculations play a role in demand planning, according to the survey?

Only 21% of companies use statistical calculations based on external sources, highlighting a gap in the use of advanced forecasting methods.

What role does top management play in demand planning across companies?

Top management provides support in 61% of companies, indicating a recognition of the importance of demand planning in achieving business success.