What makes advanced demand planning capabilities indispensable today?
If the forecasts made in a demand plan fall short of the actual demand, the business loses on a part of the growth opportunity. On the other hand, if the actual demand falls short of the forecasts, the inventories are left with stale stock, which can generate significant losses in fast-moving supply chains. In addition, fluctuating demand levels and uncertainty resulting from geopolitical tensions has further injected volatility into the business landscape.
That’s why high-precision demand planning processes are crucial today. In addition to helping businesses manage the uncertainty, they also contribute to increased revenues and more agile supply chains. So, how can organizations improve their demand planning processes? The first step is to assess the current state of their demand planning capabilities – following which, they must leverage the right solutions to achieve improved forecasts.
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Five levels of demand planning maturity: where do you stand?
Organizations can assess the state of their demand planning processes by identifying where they fall in the following five levels of demand planning maturity :
- Reactive: This stage is characterized by siloed marketing, sales, finance, and operations teams, which employ their own forecasting processes. Typically, these teams generate forecasts based on experience, and are not accountable for the accuracy of their forecasts.
- Anticipatory: The various teams of the organization still operate in silos, but the supply chain is now modeled with rudimentary customer forecasts.
- Integrated: The organization starts making use of basic forecast accuracy metrics. While multiple teams exhibit some degree of collaboration, forecasting remains isolated to operations teams.
- Collaborative: Inter-departmental silos have been broken down, and strong collaboration between teams leads to forecasts which take various indicators like marketing campaigns, sales data, operational plans into account. While the contribution of multiple factors to demand levels remains unknown, the organization is now focused on achieving improved forecast accuracy.
- Advanced: Strong collaboration between departments, high-accuracy data-driven forecasts, and incentives to achieve continual improvements on demand forecasts drive a responsive and agile supply chain
By leveraging the right solutions, businesses can deploy an incremental strategy to drive their supply chains with an advanced maturity demand planning process.
Maturing your demand planning capabilities
In order to achieve an advanced level of maturity in their demand planning processes, it is crucial to adopt the right point solutions at the right stage. Following are the key solution areas that businesses should seek to improve at the corresponding stages of maturity.