leadership – Demand Planning, S&OP/ IBP, Supply Planning, Business Forecasting Blog https://demand-planning.com S&OP/ IBP, Demand Planning, Supply Chain Planning, Business Forecasting Blog Tue, 13 Jun 2023 10:36:12 +0000 en hourly 1 https://wordpress.org/?v=6.6.4 https://demand-planning.com/wp-content/uploads/2014/12/cropped-logo-32x32.jpg leadership – Demand Planning, S&OP/ IBP, Supply Planning, Business Forecasting Blog https://demand-planning.com 32 32 S&OP Leadership & Building Effective Teams https://demand-planning.com/2023/06/12/sop-leadership-building-effective-teams/ https://demand-planning.com/2023/06/12/sop-leadership-building-effective-teams/#respond Mon, 12 Jun 2023 11:20:49 +0000 https://demand-planning.com/?p=10061

One of the most important aspects of being a successful leader is loving people leadership. You have to really enjoy it and have a passion for it. In my demand planning career I have worked in individual contributor roles but I quickly realized that my passion is really in developing and empowering people. 

The Keys to Building Effective Teams

1. The first key to building really great teams that are highly motivated and drive their own work is having a very clear mission – what are we here to do, what is our mission statement, what are we delivering year after year? It needs to go beyond just having a vision; it needs to be a defined mission statement that every business activity supports and works towards

2. Secondly it’s mastery, i.e. getting your team members to become experts in their field. As a leader, it is my job to help people learn their jobs. What I do annually with the IBF is the certification of my planners and I always budget for that year after year because that is my way of investing and developing my team members. That’s how I give them the foundational knowledge of what forecasting and S&OP should be. They all come back and say that it was such a great use of time, that they’re better informed, understand why we do what we do, and why S&OP is a critical business decision making process. [Ed: learn more about getting your team certified here.]

3. The third key is giving team members autonomy. There’s a lot of debate around coming to the office and making that mandatory. The Coca-Cola company has a flexible work-from-home program and we are completely hybrid. I have teams all over North America. We try to have physical meetings whenever we can but I give everybody complete autonomy when they come into the office. As long as they know what their individual missions are and they have the skills and the tools to complete and do their work as effectively and efficiently as possible. I find that this kind of independence helps bring the best out in people.  

It All Starts With Hiring the Right People 

The starting point to developing effective teams where individuals can be trusted to drive value independently is of course hiring good people. People make all the difference – you could have the same process, same leadership, same technology, same everything, but when you hire good people you can really take performance to the next level. 

The number one thing I look for is enthusiasm and passion for the work they do because you can’t teach that. You bring that with you as a person. I have always been so passionate about the work that I do that people always say “Oh my God Sara, you love what you do,” because I do and it shows. That passion allows me to go and try different things and learn and continue to develop myself. I want to see that in others because I know how powerful it can be.

Number two is intellectual curiosity. I want people on my team who ask, why is it like that? I want  them to say “Oh, Sara’s offering a forecasting certification program. I don’t know what that is but I want to go do that”. I want people who want to expand their knowledge and get excited when Gartner publishes this thing, or when the latest issue of the Journal of Business Forecasting is released, or when Apple News drops an article on machine learning. 

I love when people ask why the forecast looks like that, what retailers are doing, or what is happening with the consumers because that intellectual curiosity allows them to learn and improve in their roles.

It can lead them to learn things I might not know and it might be something that we can explore and take advantage of. It’s so important as a leader to adopt the attitude that I’m not the smartest person in the room. If I am then I hired all the wrong people! I don’t know everything so I need others to bring their expertise and their learning so we can be better together as a team.

 I very much lead like that and I love having my team challenge one another respectfully and challenge me and say “Sara wouldn’t it be better if we did it this way”. If it makes sense I say, yes absolutely. I tell them to go explore it and report back on what they find out and if it’s something that we need to go after, let’s figure out how we’re gonna do it.

Mentoring Helped Me Enormously – It’ll Help Your Team Members Too

Mentoring is very important in people’s career development and I’ve had many mentors in my career. Without my mentors and advisors I’m not sure if I would be where I am today. Mentors are people who can advise you but do supervise you. I have had people approach me for mentorship after hearing me speak at a Town Hall or at a conference.

When people reach out to you you can see if there’s a personal connection (i.e. beyond just professional interest). If there is, it is worth establishing a structured mentoring process. It’s my job as a mentor to schedule time for and provide a framework whereby there is an objective for the mentee, with actions or follow-ups that are then documented by the mentee that help to track progress. It’s a two way street: the mentee has to commit to doing work outside the meetings and the mentor has to provide feedback and guidance to make it worth their while.

Mentors have helped me get through some tight spots. I have had career failures – just like we all all do – and whenever I had those challenges, my mentors helped me get through them. Now I want to pay it forward and I have many, many mentees and many of them just find me. In fact, the latest mentee who reached out to me found me through an IBF podcast on Forecast Value Added. He’s currently implementing S&OP for a company in Atlanta and he wanted my perspective on certain challenges that he’s facing, so we connected. My point being, when people reach out to you, think about how you can help them and don’t be shy about formalizing a mentor/mentee process, whether that’s internal or external to the company.

Leadership Is Driving Team Members Towards Self Actualization

Ultimately, high-performing teams in any field is down to leaders building up their individual team members, giving them mastery over their domain, and bringing them to a point of self-actualization whereby they become the value drivers of the organization. It’s my goal at all times to build people up so I’m not the smartest person in the room. 

 

One of the best ways to develop demand planning teams is training and certification. IBF’s Certified Professional Forecaster program trains your team in demand planning best practices and validates their knowledge and skills. Upskill your team

 

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6 Demand Planning Skills You Won’t Find In Textbooks https://demand-planning.com/2021/09/28/6-demand-planning-skills-you-wont-find-in-textbooks/ https://demand-planning.com/2021/09/28/6-demand-planning-skills-you-wont-find-in-textbooks/#comments Tue, 28 Sep 2021 12:05:00 +0000 https://demand-planning.com/?p=9293

“Every time you have to speak, you are auditioning for leadership.” James C. Humes

Demand Planners are commonly characterized as analytical and data minded individuals, which is a fair statement and true for the majority. In recent years, I have noticed that talented and influential Demand Planners all excel in the industry specific skills required for the role, however what makes a few exceptional is their ability to positively collaborate with peers, and to generously share their knowledge to help others succeed.

I have gathered six skills that you may not find in demand planning textbooks. These are a healthy blend of soft skills which, combined with your current skill set, will certainly cultivate a mindset of team culture, personal growth, and productivity.

1. Creativity

There is an artistic component to demand planning that is often ignored. An abundance of creativity exists in problem solving, which inspires innovation and diversity of thought when attempting to discover unique solutions to common problems. Creativity exists in team situations when contributing new concepts in an S&OP meeting, or in process improvement.

Consider adding some of your unique personality to data visualizations or explore creative possibilities when using your pattern recognition and probabilistic skills to improve current methodologies. If you are looking to generate passion in your day to day, get creative.

2. Listening

If you aim to build a solid relationship with key stakeholders that you interact with, then becoming an active listener will get you there sooner. Allowing others to speak while genuinely taking an interest in what they have to say, will demonstrate your interest and concern for the topic being discussed. This will also provide you with an opportunity to understand the overall concerns or issue, so you can offer intelligent feedback.

Active listening will accelerate your learning and is an essential skill that will help you to better understand the needs of your organization and co-workers.

“Being able to articulate a complex issue in calm, simple, and clear terms is a superpower”

3. Communication

Clear verbal and written communication will often help you present and sell your newfound ideas with greater success. What you say and how you say it matters. This could be the tone of your voice, posture or hand gestures. Being able to articulate a complex issue in calm, simple, and clear terms is a superpower. There is no need to use technical jargon where a simple explanation will be enough

. Concise and punchy data points combined with some storytelling are always preferable if you are looking to hold the attention of your audience when presenting and speaking. You need to be able to communicate well and convey strong, persuasive ideas to achieve the goal of connecting with others.

“Empathy is morale improving and a recognized leadership skill in today’s workplace”

4. Empathy

Showing reasonable concern to colleagues during instances of difficulty is an important part of how we interact with each other. It temporarily takes you out of your own perspective and places you in the position of the other person which allows you see a situation differently and often with less judgement.

Empathy is morale improving and a recognized leadership skill in today’s workplace. It shows your colleagues that you are committed to assisting them to reach their objectives by openly communicating workplace concerns to reduce tension and stress in the workplace. This generally leads to win-win outcomes, increased productivity and a more pleasant work culture.

5. Mentoring

Whether you are patiently explaining forecast methodology to key stakeholders or giving career advice to a colleague, mentoring initiatives elevate both mentee and mentor through this transfer of knowledge and shorten the learning curve of the person you are coaching. Effective use of this skill leads to higher levels of team engagement, trust, and innovation within the organization.

Sharing your expertise with others can offer useful feedback for your own ideas and help you develop leadership and management skills. A mentor empowers the mentee, helping them to achieve their future goals through their generosity, patience, and desire to develop others.

“You do not have to be a manager to lead within your organization”

6. Leadership

You do not have to be a manager to lead within your organization. Learning and practicing all the above skills make an effective leader in today’s workplace. Demand Planners have a central role to play within an organization, bridging Finance, Sales, Marketing, and Supply Chain, so good leadership skills are required to bring people together under a common objective.

Genuine leaders give credit to the rest of the team when things are going great. They are focused, have a clear direction, and understand how each of his or her actions will affect the rest of the team. They make tough decisions with confidence under pressure and are willing to be accountable for shortcomings.

These skills will not only help you to become a successful Demand Planner, but they will certainly influence the environment and culture you work in by building trust and cultivating a natural inclination in people to move towards something better.


For more insight into forecasting and planning best practices, join us at IBF’s Business Forecasting, Planning & S&OP Conference in Orlando, held from October 19-22 at the Wyndham Orlando Resort. The biggest and best event of it’s kind, it’s your opportunity to learn best practices in S&OP, demand planning and forecasting, and network and socialize in a fantastic setting. See here for details.

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Building An Environment Where Demand Planners Can Succeed https://demand-planning.com/2021/03/04/building-an-environment-where-demand-planners-can-succeed/ https://demand-planning.com/2021/03/04/building-an-environment-where-demand-planners-can-succeed/#respond Thu, 04 Mar 2021 17:21:11 +0000 https://demand-planning.com/?p=8980

Effective demand planning requires good processes, agile systems, and talented people. Getting these all to work together requires a culture that rewards performance with opportunities for career growth as was as financial benefits.


All too often, I have seen companies try to improve their demand planning by investing in updated reporting systems and more elaborate processes. What’s often missing is a human element that can make or break the overall planning program. Without the right culture it’s hard for the demand planning function to flourish. We often blame people for not performing as expected, and ignore the environment that people work in. Without the right structure, it’s hard to perform well.

So what would a culture that supports effective demand planning look like? Here are 6 key elements that I believe contribute to growing an effective demand planning program.

Leadership That Believe In The Value Of Demand Planning

No demand planning program will survive very long without leadership support. The attitude that the leadership team has regarding planning will impact every aspect of the planning process, and all the people involved in it. Leaders who believe in planning promote it within their own company and to their suppliers and customers.

They regularly participate in planning meetings and support and challenge planners in their attempts to turn conversations about the business into numbers and plans. And they protect everyone involved in the process from undue criticism when reality intrudes and plans fail to predict the future correctly. The leaders don’t need to be experts in planning, but they do need to show consistent interest in the success of the planning programs.

Hiring The Right People

This is perhaps the most difficult piece, as Demand Planners are often hired based on their skillset. If a candidate’s skillset matches the company’s current needs, this is often a determining factor in hiring. And in many cases, this is a good tactic.

However, demand planning often requires analyzing and managing problems that do not have predictable patterns and have not been seen before. Every business and every customer has unique needs. So, while having a solid skillset is important, being able to “figure things out” is often a critical skill that cannot be measured by a list of qualifications on a resume.

When hiring a new Demand Planner, I recommend asking for examples of how the person has effectively handled these kinds of situations in the past. How did they solve a specific planning problem when they had few resources to do so? For example, how did they plan for an item that was completely new to the company, where there was no historical data to use as a base for future planning?

In addition, look for Planners who can handle being criticized for providing inaccurate data. Even though we all know that forecasts are never 100% accurate, some people will expect perfection. And they will often express their discontent by criticizing the Demand Planner. So a Planner who can professionally and calmly explain the rationale behind the numbers and maintain the confidence of the S&OP team members will have a much greater chance of success.

Training

Every company has its own unique way of managing the data that drives planning. New Demand Planners are often expected to teach themselves how to properly use the various systems that they use each day. While being “self-taught” has its advantages, it often also means that there are gaps in the Planner’s knowledge that only proper training can fill. And while training is often expensive, the lack of training can mean that users make expensive mistakes, take longer than necessary to master the key skills they need to be effective, and develop workarounds that often bypass the tools that would otherwise help them in their work.

As part of each Planner’s annual evaluation, I recommend asking what training they would like to receive in order to be more effective in their day-to-day tasks, as well as what training would help them advance in their career. Encourage them to look outside the company for training programs that the company may not be able to offer. And encourage them to visit the customer locations to see how the products they plan are displayed, and how their competitor’s products look on the shelf. Visiting customers with a team of sales and marketing people can be a very useful training activity for all involved.

Appropriate Performance Metrics

I am sure that most people reading the heading for this section immediately thought of forecast accuracy as the key metric for demand planning performance. And this is certainly important.

I believe the most important metrics for Demand Planners are communication and leadership. Without these there is no way for a Planner to meet the other, more common metrics such as bias and MAPE. Communicating item performance issues in a manner that other S&OP partners can understand, and then leading them to take action by recommending actions to improve forecast performance are key roles for any Demand Planner.

I can already hear the complaint that communication and leadership are hard to evaluate. So is nearly every activity that makes a person effective in their role. (Ask any group of people what makes a good teacher and you’ll get a different answer from every person.) I admit that measuring effectiveness in these two areas can be subjective. But I believe we must try to measure it.

One way I have seen this done is through measuring the actions a Planner recommends and whether these are implemented and effective. In my own career I kept spreadsheets for issues that I have communicated, along with my recommended actions. I tracked whether recommendations were accepted, who was accountable for acting on them, and when the actions were expected to be completed.

This not only helped me track what needed to be done, it also added accountability to everyone on the team. People knew what issues were being addressed, who owned resolving them, and when the issue should be resolved. This measured both my ability to communicate clearly as well as how effectively I was able to lead the team to take action.

Effective Tools

If you want to know if the forecasting and planning tools your Planners are using are effective, look at how often they revert to Excel to get their work done. While Excel is certainly a helpful tool, all too often it is used in place of other systems that are too hard to use or where the user has not had sufficient training. Exporting data from a system to make it presentable to a larger audience or to do analysis is understandable. But when users must do this with too many systems, it tells me that the original systems are not being used properly. Often this is because they are not designed with the user in mind. Properly designed user interfaces can make even the most complex systems more user friendly and increase usage of these expensive systems.

Key metrics for all members of the S&OP team should be easily accessible and not require exporting and reformatting before they can be presented to others. Forecast data especially should be easily accessible and reported in both units and dollars for each period.

In addition, planning systems must be stable and updated regularly. Plans based on shifting or incomplete data will undermine the entire process. Everyone on the S&OP team needs to know when systems update and how to report issues with each system. And as the business evolves, reporting systems should be updated to reflect the new reporting needs.

Clear Career Growth Paths

Nothing discourages an employee more than realizing that their current position is a dead end. And Planners who are good are sometimes discouraged from looking to advance since the company benefits from them staying where they are. In their role Demand Planners can impact every area of a company – Finance, Sales, Operations, and Marketing. If they are encouraged to learn how these other areas function and what skills are needed to perform well in them, they may find that they have an interest in moving into one of these areas.

I believe they should be encouraged to seek out other suitable roles, and that management has an obligation to support them in this process. Part of every Demand Planner’s annual evaluation should be an investigation into what other functional areas interest them. They need to know that they have a future with the company if their interest shifts to another role within the company.

It’s too easy to believe that poor demand planning is the result of an individual Planner’s poor performance. I believe we need to pay more attention to the environment that Planners work in and ensure that it is conducive to the Planner’s success, career growth and promotion. Once we create an environment where Demand Planners can thrive, then we can begin to properly evaluate our Demand Planner’s individual performance.

 

 

 

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Scenario Analysis for S&OP: Case Study https://demand-planning.com/2017/06/08/scenario-analysis-for-sop/ https://demand-planning.com/2017/06/08/scenario-analysis-for-sop/#comments Thu, 08 Jun 2017 14:41:53 +0000 https://demand-planning.com/?p=3617 Today’s business environment is becoming ever more volatile and complex. Market dynamics are changing rapidly and lead times required to respond are weeks or days, not years and months.[bar group=”content”]

Scenario Analysis Allows Management to Easily Understand Changes And How To Respond Effectively

The more your business experiences supply side volatility, demand uncertainty, or both, the more you need to understand their impact and the ability to respond. For that, scenario analysis is a must. Our experience has shown that scenario analysis is a useful tool for Senior Management if it is simple to understand and the analysis is actionable. It helps to understand the potential impact of a change in business, as well as the best way to mitigate/leverage it. To get the most from scenario analysis, we should concentrate on gaining insights within the context of operational constraints and realities, not on evaluating operational details.

An effective scenario analysis:

  • Considers simultaneously a range of strategic, tactical, and operational goals and constraints
  • Views business holistically rather than by function
  • Takes into account the domino and cumulative effect of multiple events
  • Keeps everything transparent to be most effective it must do all the above quickly and efficiently. We recommend that the scenario analysis models should run in 10 minutes or less after an update.

What drives scenario analysis? The business needs or questions to be answered. A critical first step in building a successful scenario analysis system is to understand what issues are creating the greatest difficulty for executives and/or what opportunities have the potential to strengthen the company. Then you will know what data have to be collected and how the model has to be configured to meet the needs of Senior Management.

An Example of Scenario Analysis: Sailboat Supply

Let us take an example of Sailboat Supply (SBS), which is a manufacturer and wholesaler of aftermarket spare parts for sailboats. The model for SBS has the following characteristics:

Product Families: SBS has four product families: Blocks, cam cleats, mounts, and swivels. Each family has very different resource requirements, profit margins, and sales volume. A new product family, winches, is in the development phase. Winches are more complex and quite material intensive, but are expected to yield excellent margins. Their preliminary forecast for market demand is fairly strong.

Markets: SBS has five established markets: US East, US West, US South, Canada East, and Canada West. Emerging Markets are in the United Kingdom and Spain. These markets have different growth profiles and margins. Manufacturing: Manufacturing is relatively simple. When bottlenecks occur, they are mostly in molding and packaging. Labor is available in regular shifts, overtime, and by contract.

Raw Materials: Manufacturing considers nine components to be critical since they have very long lead times and/or highly variable costs. Some materials are common across all products, although in different proportions, and some are unique only to one or two products.

Suppliers: SBS has 13 suppliers for the nine critical components. Three materials have multiple suppliers with differing costs, and lead times as well as minimum quantity requirements. Six materials have unique suppliers. Figure 1 gives 24-month revenue forecasts of all the four product families. It shows that SBS is not having a good year. Revenue of all four families is down from last year.

Integrated Picture Of The Business

Figure 2 gives an overall snapshot of SBS. The charts show the sales forecast by units and by revenue, as well as some operational and financial numbers based upon the sales forecast. The bars in the profit graph represent the minimum profit target set by Management. Graphs are based on a live model. Operations have been optimized within specified constraints (planning bill -of -materials, materials costs, supplier lead times, minimum order quantities, capacity constraints, labor costs, etc.) to meet demand and the minimum monthly profit target, and to maximize overall profit for the two- year period. The one -year profit and cumulative profit over two years are shown in Figure 2.

Change In Demand

New information comes from marketing showing that the demand for blocks will significantly drop because of the introduction of a new competitive product. If no change is made in purchasing and production plans, the profit is expected to drop to $155 million in the first year (12% decrease from the earlier forecast) and to $270 million over a two year period (38% decrease from the earlier forecast). The situation is not bad in the first year because it still yields profit above the minimum set by Management. However, the profit over the two- year period does not look good, because it is much below the minimum target. After revising the purchasing and production plan based on the new forecasts, the profit of the first year comes to $161 million (4% higher than the previous estimate) and to $334 million over a two-year period (24% higher than the previous estimate).

What Can Planning Do To Improve Business Performance?

Management is not content with these profit numbers. Now the question is this: What options does SBS have to improve business performance especially next year? Here are the options:

New Product Launch: The VP of Marketing suggests that SBS should launch the new product family of winches sooner than originally planned. This product line will not only dramatically increase the overall revenue stream but also provide excellent profit margins. Management requests the S&OP team to investigate it. The S&OP team sets up the model to call for the launching of winches, but lets the optimization engine pick the timing of that launch.

The results from that optimization were surprising. Profit is projected to grow but not nearly as much as anticipated. The cumulative profit of the first year will rise from $161 million to $165 million (2% increase). Over the two year period, profit will rise from $334 million to $362 million (8% increase). The drill down analysis shows that SBS does not have the capacity for such labor and material intensive products. The launch of winches requires ordering more material, which would come from more expensive suppliers, and use more expensive outsourced capacity for some of the molding process.

The S&OP team makes the following recommendation to Senior Management:

  • Rebalance operations due to lower demand.
  • Continue to develop the marketing plans necessary to launch winches, and evaluate cost and financial impact of a capacity upgrade and new suppliers.

Range Forecasting And Contingency Planning

While Manufacturing is searching for better logistics, costs, and timing of a capacity upgrade, Marketing is not resting on its laurels. They realize that a new relationship with a major distributor, which has been talking with SBS about carrying some of its product lines, might provide a significant boost in sales for winches. After discussions with the distributor, the S&OP team creates a higher demand forecast with some necessary marketing and promotion recommendations. Further, the team determines that with this demand scenario an additional capacity upgrade will be needed.

Presenting Scenarios At The Senior Management Review

At the next Senior Management Review, the S&OP team offers two scenarios: One, there is a 70% probability that the new distributor will not sign the contract within four months. To meet this level of demand, the required capacity upgrade will cost $2 million and the store rebate that needs to be offered will cost $1.5 million. In this scenario, total company profit will be $177 million in the first year, and $393 million over the two year period. Two, there is a 30% probability that the new distributor will sign the contract. In that case, capacity needs to expand even further, which would cost an additional half million dollars. Also, further expansion of promotion would be necessary for the next six months, which would cost half a million dollars. Here overall profit is expected to be $180 million in the first year and $410 over a two year period. Management decides that given the strong long range demand forecast for winches and the importance of the potential relationship with this new distributor, SBS will proceed with the second scenario.

As we all know point forecasts of the future are by definition wrong. However, in eight months when the new distributor signs on with SBS, management feels they are well positioned for this new opportunity and have made an informed decision based upon their understanding of alternatives and trade offs.

Concluding Remarks

Every decision about the expected demand impacts supply as well as profit and revenue. The beauty of scenario analysis is that it not only translates the outcome in terms of volume and units, which Sales and Operations Management wants, but also in terms of profit and revenue, which management wants. The example here is simplifi ed. But scenario analysis is a powerful tool. It provides visibility into the future, enables one to act proactively, and helps to build a sustainable and profitable business. As business has become more complex and diverse, planning methods have to keep pace. In the past, all that was necessary to run a profitable business was to have a good product and operate efficiently. But now companies must open new markets through product innovation, keep customer service levels up even in the face of highly uncertain demand, and deal with complex supply chain issues. Scenario analysis techniques provide a systematic way to make decisions about complex issues. They can help us evaluate different courses of action based on what we want to achieve and when, and how we want to measure the outcome.

As published in the Spring 2012 issue of the IBF’s Journal of Business Forecasting (JBF). All Rights Reserved.

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How New Demand Planners Pick-up Where the Last one Left off at Unilever https://demand-planning.com/2017/03/08/how-new-demand-planners-pick-up-where-the-last-one-left-off-at-unilever/ https://demand-planning.com/2017/03/08/how-new-demand-planners-pick-up-where-the-last-one-left-off-at-unilever/#comments Wed, 08 Mar 2017 15:35:29 +0000 https://demand-planning.com/?p=3593 The demand planner serves as the unbiased arbiter in the S&OP cycle. This role involves taking a cold hard look at manufacturing, logistics, marketing, sales and finance to paint an objective picture of demand. [bar group=”content”]

Demand Planners, And Their Knowledge, Are Highly Valuable

A strange blend of cross-departmental cooperation, leadership and statistical analysis, demand planners are the rarest of breeds. This unique combination of analysis, leadership and a can-do attitude is a prized commodity.

The rarity of the skillset means strong demand planners are hard to find, and harder to retain. And that is a major problem, because when demand planners leave they take their knowledge with them, making sustainability of knowledge a critical issue for many forecasting teams.

The chances are that right now, your demand panning team is facing some kind of sustainability gap.

Overcoming Knowledge Gaps at Unilever

My experience at Unilever has taught me that the biggest and most frustrating part of demand planning is when an experienced demand planner leaves. When this happens, the team has to spend time reinterpreting the data that was under the remit of the departed planner, and subsequently turn that data into knowledge that can be acted upon. Long meetings to reestablish the correct range of uplifts or cannibalization of each promotional activity is a common scenario – knowledge that was known that is now lost. This is frustrating not least because it is entirely unnecessary. Learning something that was already known is, after all, absurd. How then do you fill this knowledge gap, ensure continuity and avoid wasting time when a demand planner leaves or moves to other product categories?

The Right Tools to Hold and Share Your Greatest Commodity: Company Knowledge

What you need to mitigate the damage of demand planners leaving and to plug the sustainability gap is a mechanism for sustainability of knowledge. We’re talking about the right tools to collect and store information that can be held centrally and maintained regardless of who comes and goes within your team. Something that would ensure that whichever employee leaves, their knowledge and insight remains easy to access by whomever takes over. What we use at Unilever is a Promotional Library. The Promotional Library is our tool for Knowledge Management (KM). KM is the planning, organizing, and controlling of people, processes, and systems in an organization to ensure that its knowledge-related assets are improved and effectively employed.

KM is nothing new, but remains an under-exploited tool in S&OP. Mature S&OP environments are embracing this kind of tool to maintain company intelligence – but this should be standard operating procedure for all demand planning teams regardless of size or maturity. After all, forecasting is very much a company intelligence process and without stored knowledge accessible to everyone, there is a serious hole in your approach to forecasting.

The Difference Between Data, Information and Knowledge

Data: These are your facts in their simplest, unexploited form, most often relating to sales, invoices, inventory etc. This is the raw data collected from other departments.

Information: This is your findings based on analysis of your data. You turn your facts into something from which inferences can be made. This can be trends of sales or relationships between sales performance and promotions, for example.

Knowledge: This is insight gained from interpreting your information based on a thought process, context and experience. This knowledge forms the basis of an action plan and is the ultimate goal of forecasting: turning data into something actionable and useful that will add value to the company.

Knowledge, or marketing intelligence, is typically retained in the heads of demand planners, or in files on their computer. Rarely is it centrally stored for incoming demand planners. Knowledge is the ‘end product’ of forecasting that allows for strategic decision making. Therefore, it must be treated as a commodity, and not be allowed to disappear when personnel changes are made.

Characteristics of an Effective Promotional Library

It must be enhanced in terms of depth and consumability and made easily transferrable. Even if companies maintain sales data across extended horizons, leading indicators and qualitative data are hard to trace back as they are stored in different locations that get lost through time. The execution of KM then comes in the institutionalization of a promotional library that computes, documents, and secures all the necessary information to accelerate and elevate the standard demand review. This means you can check across categories, activation types, and time horizons with ease – keeping you from extensive meetings and aspirational forecasts.

Practical Benefits of a Promotional Library

Through excellent data-driven MI assumptions, value is added to the business by:

(1) Simplicity and agility of decision-making
Even in the face of new territory, having data (across not only time horizons but also categories) helps in proper benchmarking for better qualifiers than rough guesstimates.

(2) Improving profit margins through healthier inventory levels
Higher forecast accuracy, in principle, leads to improved inventory – translating to better liquidity and higher profit margins.

(3) Improving Customer Service Levels (CSL)
Demand management is an enabler in the goal of every supply chain: bringing to the customer the right product at the right place at right time.

(4) Continuous Improvement in Forecasting Metrics
Data is a double-edged sword. Deeper data can translate to better assumptions, and iterations along the years refine hypotheses about the company and its DNA.

(5) Consistency and Sustainability
Organizational Learning is achieved through maintenance of both tacit and explicit knowledge to avoid disruption caused by knowledge gaps.

Embracing Instinct and Nuance with a Promotional Library

One area that may seem anathema to the cold, hard statistical analysis of demand planning is the nuances of forecasting, developed through personal experience. This personal experience is what drives insight into demand, and enables demand planners to understand the quirks of certain SKUs. It takes time to understand the impact of month to-month business activities and customer specific history. Demand planning teams must strive to retain this insight, as it allows for inferences to be made which is the key differentiator in achieving robust forecasts.

We mustn’t forget that demand, just like human behavior, cannot always be rationalized with statistical models. In that sense, forecasting is an art. Intuition may not come naturally to the quantitively minded, but its value in painting an accurate picture of future demand must not be underestimated.

I’ll be speaking more about how Unilever sustains demand planning & forecasting knowledge at IBF’s Asia S&OP & Forecasting Conference in Singapore this month. I would be happy to further discuss this topic in person.

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Leadership in Business Forecasting & Planning https://demand-planning.com/2012/09/18/leadership-in-business-forecasting-planning/ https://demand-planning.com/2012/09/18/leadership-in-business-forecasting-planning/#comments Tue, 18 Sep 2012 14:59:15 +0000 https://demand-planning.com/?p=1511

At the IBF, we realize that executives are faced with unprecedented pressures to react quickly and maintain a healthy company track record, despite rising costs, shrinking margins, and lack of loyalty from customers. With a proliferation of new products in the marketplace, shorter product life-cycles, the difficulties in succeeding has become even greater. For many product launches, companies have only one shot to get it right because of their shrinking life spans. The need for speed and accuracy is forcing us to look for new ways to make the right decisions, develop more efficient and responsive supply chains, and manage risk and volatility. As a result, companies are searching for the demand signals that can provide a clearer picture on how the business is doing at a given point in time.

Questions arise, do we have the right people to capture and analyze the signals? What signals are available that should be considered? What technology solutions and customizations are needed to be successful? What talent development programs are needed to produce the right people for these roles? What organizational structures and career tracks are needed to retain such talent? And what process advancements and collaborative activities, both inside and outside the organization, are needed to help us to become market leaders for today and tomorrow? And of course, where do you begin?

Well, it begins by stepping outside your organization and learning from other leadership teams that have led their companies to success. You will find these teams at IBF’s upcoming “Leadership Business Planning & Forecasting Forum,” taking place in Orlando, Florida USA on October 22, 2012. This premier executive forum is geared towards professionals like yourself, engaged in higher levels of responsibilities and those that work with them.

Executive Discussion Streams Include:

✲ How to leverage Integrated Demand Signals and Systems
✲ What kind of Talent Management and Organizational Design do we need today
✲ The future advances in Sales and Operations Planning (S&OP)

Distinguished Panelists:

  • Michael Wachtel, Vice President Demand Planning, L’OREAL
  • John Gallucci, Senior Director of Planning, PINNACLE FOODS
  • Cliff Engle, Senior Vice President Global Supply Chain, FENDER MUSICAL INSTRUMENTS
  • Mark Kremblewski, Global Business Process Expert – Demand Planning, PROCTER & GAMBLE
  • Grant Hoffman, CPF, Sr. Director of Global Planning & Operations, MOTOROLA MOBILITY/ GOOGLE
  • Rick Davis, Vice President Business Planning, KELLOGG’S
  • Jonathon Karelse, VP – Strategic Planning and Corporate Development,WHOLESALE TIRE DISTRIBUTORS
  • Michael Vincitorio, Senior Director Demand Management / S&OP, OFFICE DEPOT
  • Rizwan Asim, Director of Supply Chain. MCDONALDS
  • Mike Pechtel, Director of Strategy, Planning & Operations, WHIRLPOOL CORPORATION
  • Patrick Bower, Sr. Director, Corporate Planning & Customer Service, COMBE INCORPORATED
  • Rafal Porzucek, Global Process Leader for Demand Planning, PROCTER & GAMBLE
  • Trevor Miles, Vice President, Thought Leader, KINAXIS
  • Lora Cecere, Founder, SUPPLY CHAIN INSIGHTS
  • Larry Lapide, Researcher, MIT

Of course, there will be the right balance of learning, networking, and fun. Attendees will have an opportunity to network with key executives at our evening BBQ dinner. A lesson or contact that you pick up during a face to face conversation may prove invaluable in the future, along with the solutions discussed during the informative sessions.

We invite you to attend and boost your organizations success by attending the IBF’s Leadership Forum — the only program of its kind with a diverse group of demand planning, forecasting, and supply chain leaders in attendance.

I look forward to seeing you in Orlando!

Kind Regards,
Anish Jain
Managing Director
Institute of Business Forecasting & Planning – IBF

Save by bringing groups! Additionally, have your team attend our “Supply Chain Planning & Forecasting: Best Practices Conference” taking place the day after the Leadership Forum, October 23-24, 2012. Details can be found here: www.ibf.org/1210.cfm

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