The Planner’s Guide to Demand Planning Best Practices: What Adds Value and What Doesn’t
Demand planners in manufacturing are the backbone of efficient supply chains, ensuring the delicate balance between supply and demand, optimizing resources, and maximizing customer satisfaction. However, many planners often find themselves stuck in tasks that consume time but deliver minimal strategic value.
This guide highlights demand planning best practices that add real value and identifies common pitfalls that planners should avoid.
High-Impact Activities That Add Value
1. Strategic Forecasting Segmentation
This should be the top priority since it forms the foundation for other high-impact activities. Effective forecasting segmentation helps planners identify and focus on the most valuable products, ensuring resources are allocated to where they have the greatest impact.
- Conduct ABC/XYZ analysis to prioritize forecasting efforts by identifying high-value products and those with predictable demand.
- Focus on accurately forecasting key product segments that drive the majority of revenue or are critical to customer satisfaction.
- Use data-driven segmentation strategies to differentiate planning approaches for products based on value, variability, and demand patterns.
2. Collaborative Forecasting and Consensus Building
Engaging with cross-functional teams ensures more accurate demand forecasts and alignment across the organization.
- Gather input from sales and marketing, incorporating segmentation and Forecast Value Add (FVA) analysis.
- Integrate real-time market intelligence and customer insights.
- Use scenario planning to assess risks and opportunities in demand forecasts.
3. Leveraging Advanced Analytics and Technology
Planners should minimize the time spent creating data and focus more on deriving insights and strategic decision-making.
- Implement machine learning tools for demand sensing and predictive analytics.
- Automate routine forecasting tasks, freeing up time for more impactful activities.
- Adopt demand planning software to establish a single source of truth for data.
4. Continuous Process Improvement
Refining processes and metrics ensures that planners focus on outcomes that drive business success.
- Use metrics like FVA to identify underperforming areas and improve accuracy.
- Regularly review demand planning processes and benchmark against industry standards.
- Establish feedback loops to consistently improve forecasting accuracy.
Low-Value Activities to Minimize or Eliminate
As part of adopting demand planning best practices, planners must minimize or eliminate tasks that detract from strategic activities.
1. Manual Data Scrubbing and Cleansing
Spending hours cleaning data detracts from strategic planning.
- Automate data preparation to ensure upfront accuracy and free up time for value-adding tasks.
2. Over-Reliance on Spreadsheets
While spreadsheets are versatile, they are prone to errors and maintenance challenges.
- Transition to integrated demand planning software or ERP systems for greater efficiency and reliability.
3. Chasing Down Missing or Inaccurate Data
Inconsistent data creates unnecessary distractions.
- Standardize data entry processes and invest in robust systems to improve data quality.
4. Overanalyzing Low-Impact Metrics
Not all metrics have equal importance.
- Focus on metrics that directly influence business decisions and align with organizational goals, avoiding time spent on minor SKUs with negligible impact.
5. Firefighting Last-Minute Changes
Constantly reacting to last-minute adjustments disrupts planned activities.
- Implement systematic solutions like buffer stock or flexible production plans to manage demand volatility.
6. Attending Non-Essential Meetings
Unfocused meetings waste valuable time.
- Advocate for streamlined meetings with clear agendas and action items, and delegate attendance when appropriate.
How to Transition to High-Impact Activities
To implement demand planning best practices, planners must shift their focus from low-value tasks to activities that drive strategic outcomes.
1. Implement Segmentation
Adopting segmentation ensures planners focus on the most critical products and strategies, enabling more accurate forecasts.
2. Automate Low-Value Tasks
Invest in tools that eliminate repetitive tasks like data scrubbing and manual reporting, allowing planners to focus on higher-value activities.
3. Measure Forecast Value Added (FVA)
Regularly track and evaluate FVA to ensure activities contribute to organizational goals.
4. Enhance Cross-Functional Collaboration
Foster stronger relationships across teams to reduce silos, improve data quality, and align on shared objectives.
5. Upskill in Analytics and Technology
Equip planners with skills in data analytics, machine learning, and advanced software tools to boost their strategic contributions.
6. Adopt Agile Planning Practices
Agile methodologies enable planners to adapt quickly to changes, reducing time spent on reactive tasks and enhancing their overall impact.
The Cost of Not Addressing Low-Value Activities
Failing to follow demand planning best practices can have significant consequences. Time spent on non-strategic tasks not only hampers a planner’s productivity but also affects the organization’s overall performance. Delayed decision-making, inaccurate forecasts, and missed cost-saving opportunities are just some of the consequences. Shifting focus to high-impact activities ensures planners deliver maximum value, driving organizational success.
Demand planners play a critical role in the success of manufacturing companies. By adopting demand planning best practices—such as forecasting segmentation, leveraging advanced technology, and continuous process improvement—and minimizing low-value tasks like manual data cleaning or overanalyzing irrelevant metrics, planners can unlock their full potential.
The result?
Improved efficiency, more strategic contributions, and a stronger impact on organizational success.