Let’s face it: the larger the organization, the more siloed departments seem to become, leading to internal redundancy and wasteful inefficiencies. Worse, siloing can cause companies to miss out on key market moments or be slow to pivot to new opportunities, a huge miss in today’s dynamic manufacturing marketplace. Demand planning, a function of Sales and Operations Planning (S&OP), is helping to change this.
S&OP is an integrated business management process that streamlines business practices, potentially saving companies hundreds of thousands or even millions of dollars each year. A critical component of S&OP is demand planning, which uses forecasts and operational experience to estimate demand at various points throughout the supply chain.
Ready to bring demand planning to your manufacturing organization? Here are three key benefits and considerations:
Align functions across an organization.
Myriad processes go into getting a product to a consumer’s door and these processes aren’t always apparent, even within a single company. Getting everyone out of their silos and into alignment is critical to an organization’s success. Demand planning serves as the catalyst for this alignment.
From marketing to operations to logistics, demand planning brings leaders together across your organization. For example, a salesperson may be notoriously tight-lipped with projections, but if he or she can let purchasing know that they’re planning to sell 20,000 units, purchasing knows to buy 20,000 units from China with a six-month lead time. Likewise, inventory and distribution managers know they’ll have 20,000 units in their inventory when shipping to stores across the United States.
Adopt a more realistic global perspective.
I recently covered the “myth” of reshoring, positing that while it’s great to return some jobs to the United States, we can’t deny the fact that manufacturing is now a global industry. To compete and win in today’s marketplace, companies need a global mindset.
No matter the consumer product, chances are high that at least a portion of it is components are manufactured outside of the United States. This global shift adds an interesting dimension to S&OP. Demand planning makes it easier for companies to account for lead times, distribution options, and other manufacturing processes that did exist two decades ago.
Hire the right talent.
Ready to add a demand planner to your organization? The right hire must have a strong understanding of current market data, be an expert communicator, and be comfortable using predictive analytics software. Demand planners must be skilled at building connections across departments. For example, they’ll be taking numbers from the sales team and turning them into actionable insights for the supply chain team.
Currently, most available demand planning positions are at larger organizations with $100 million+ in annual revenue. However, as more organizations realize the benefits of demand planning in today’s dynamic global marketplace, additional positions will open at mid-sized companies.
Interested in learning more about demand planning as it impacts a company’s bottom line? Contact me at MSanborn@LucasGroup.com.