One year ago, we listed some of the things that we believe would matter today in the demand management field. To our experience, we feel that our thoughts and assumptions were right! (See blogpost here) These assumptions are confirmed when we look at what industry observers envision for the future of the supply chain. According to these experts, the Fourth Industrial Revolution is near. Developments in various fields such as artificial intelligence and machine learning, advanced analytics, and cognitive technology and deep learning are all enforcing one another. All these technologies will help shape and improve the problems we face in supply chain management & operations. If technology can help us do things faster, more efficiently and with greater level of accuracy, then what are we waiting for? How can we leverage these techniques and all the data available to challenge our current practices and start going the extra mile?
What does this entail for demand management?
When we look at the role of demand management over the past years, tasks and responsibilities mainly involved predicting the future sales based on primarily historical sales and qualitative input from the sales people. If we look at that process, with all the technology and techniques available today, we can say this is becoming outdated and single-focused. Today we see that the entire business, not just supply chain, is benefited by insights of how the sales might evolve. We are seeing the focus shifting from working in silos to growing profitability of the entire enterprise, also referred to as “cross-enterprise demand planning”. This requires more complete, detailed analysis and quicker answers. How can we improve that demand management process and ensure that we can inject the whole business with more accurate, relevant business insights and the right numbers? The big answers lies in the big data. Key is to intergrate the external reality into internal results.
What does this mean?
Let’s sum up some of the processes and things you should establish to take your current process to a higher and more complete level.
- Centralise: the supply chain units should get a more central function within your organization, not only to execute operations, but also to improve the decision making process. Instead of just focussing on improving sales enablement, it should be used at other echelons within the organization as well and function as a business enabler.
- Shift from internal to external: the past has great insights, but it is what it is: THE PAST. Internal historical sales data tells you what happened in the past, it doesn’t tell you why it happened. If you know how something is influencing your business, you can use these insights to help estimate future demand.
- Soft skills: Demand management has mainly been about numbers. As new technologies come in to place, soft skills become more and more important. Since the outcome of new demand planning techniques creates input for wider business enablement, these skills need to be stimulated within the demand planning team.
Putting theory into practice: how we see it at Solventure LIFe
Although these 3 key objectives above look simple, we have seen this is not such a piece of cake once you start implementing a new forecasting technique. Different processes, structures and techniques require a flexible mind. To adequately start a new and improved supply chain process with advanced forecasting techniques, we have conducted a failure-proof approach that helps you successfully implement advanced forecasting techniques and start a new and improved process. Of course everything starts with a good plan! Map all the different steps in the process, set a timeline and divide roles and responsibilities. Once this is clear we see 3 key steps to help everyone get aboard and get your advanced forecasting project started.
- WORKSHOP: Start with a workshop! It can function as an ‘awareness building’ instrument for the different profiles within your organisation. In the workshop you analyze a business case. By including a bigger group of people (max. 8-10) in that brainstorm, you get input from various angles within your company. Capturing that information as input for the project is crucial. Organizing a workshop is a great tool in your change-management process!
- PILOT: Allright, so everyone is aligned, you have tested how your advanced forecasting techniques could help you and the results look good? Then it is time to start to build trust, you should validate the models during a 3-6 months time period.
- IMPLEMENTATION: So you have made a good proof of concept, validated by everyone in the team, and the results are promising? Time to really start using it! This is something which requires attention. Often we see that companies fail to really use what they have achieved and have established. That is where recurrent review meetings can help. Don’t loose attention!