The Journey
Parts of their journey included the need to integrate the various demand signals and begin to synthesize the data. As the product lines grew so did need for product segmentation. As we think about increasing complexity, we should begin to align with the value of segmentation activities. Segmentation strategies allow us to group products based upon a combination of particular attributes. Unlike product groups, which are a static division of products, product segmentation enables you to work with dynamic attributes. As we understand the dynamics of the products we are more likely to understand variability and its root cause. Segmentation can also assist in creating exception based approaches. In my prior experiences I have dealt with greater than 64 million store/sku combinations, clearly a call for exception based management! Segmentation can be a “heavy lifting” exercise but the benefits generally outweigh the effort.

People & Structure
Rick also discussed the integration of people and structure. Critical to the success of the journey is the development of the structure as well as the people involved in the decision making process. In his organization, Demand Planners were expected to be the demand experts. In an effort to build and foster this education, all of the demand planners will complete IBF training and certification in 2013. Credibility and step change management were highlighted as contributors to success. Of course, the integration of people and process also requires a degree of change management. And the speed to which change management occurs depends upon several factors, including; the size of the organization, the legacy of the structure and the extent of involvement at the executive level.

Your comments, thoughts, and experiences based on the above are welcome.

Joy White
Vice President, Inventory
OfficeMax

For discussion purposes, let’s view a list of potential business units that likely include; executive management, quality control, warehousing, inventory planning, logistics, marketing, sales, finance, purchasing, and manufacturing. As we know, each of these functions has different skin in the game and engages at different points in time. The timing and frequency of communication across the enterprise is critical during all stages of the product launch. If, as Michael describes the Planner is the facilitator, they must be skilled at understanding the degree of risk or uncertainly and be able to broker discussions around potential contingencies. Some of the changes that inevitability take place during the launch cycle occur when constraints are added or removed, when delay or acceleration exist, when units are increased or decreased, when the mix changes and/or the costs change. These all have a potential impact on the forecast.

A critical component of the new product launch is the need to forecast the impact to existing product. Cannibalization, in some form will occur.  In my experience there is generally always impact to existing product and this is a “must take” opportunity to generate healthy dialogue with the respective partners. For a new product launch to be successful the existing product needs attention. If changes to the existing product mix are not addressed, the consequences can hinder sales of the new product, cause product obsolescence, create margin erosion and even potentially confuse the customer. Part of our human nature is to focus on the “new”, because it is more exciting. However, in the case of inventory planning the “old” requires adequate attention for the health of the overall business.

Joy White
Supply Chain Leader
IBF Ambassador

Joy White

Panel discussions are most interesting when the panelists represent similar disciplines across a variety of industries. At the recent IBF Conference in Scottsdale, each of the 4 panelists were asked about various aspects of the planning process within their respective organizations. The range of topics included the single forecast plan (the one number plan), execution of the plan, use of metrics, frequency of the S&OP review and, of course, talent within the organization. There appeared to be a great deal of commonality and agreement on the various business approaches between the respective organizations. As we might expect, the degree of integration and frequency varied. Importantly, they all shared a very similar view regarding the “perfect candidate profile” and the increasing need for these individuals to develop and exhibit strong leadership skills.

In today’s highly competitive workplace, questions regarding the “perfect candidate profile” are always intriguing. The varying demographics of the workforce, coupled with the increasing use and sophistication of technology and the required “speed to market” make the “perfect candidate profile” an interesting discussion.  Of course in our field of business forecasting and demand planning, we know that sound analysis and mathematical skills are a prerequisite for success. However, the panelists resoundingly agreed that the number one skill required for success is the ability to lead and to confidently influence across the organization, and this ability requires “soft skills”.   It was also acknowledged that these so-called “soft skills” were not necessarily an innate attribute and required training and development. Randy Wilp, Leader of Global Commercial Forecasting at Merck & Co. Inc shared his experience utilizing an outside organizational behavior coach in his effort to build and foster the communication and “soft skills” of his team.

In my own prior experience with managing large inventory planning teams, it has been critical to the success of my organization to be able to not only build a solid forecast and replenishment strategy, but also to be able to communicate this plan to the appropriate business partners. The successful communication and “buy-in” lead to the best execution. This required the planners to be able to communicate their forecasts and plans in easy to understand terms, while clearly articulating the business benefits.  It is usually best to save the “geek speak” for like-minded peers.

As forecasting and planning organizations begin to take on a more front and center role within organizations, should we begin to consider the aspects of more robust leadership training? There is a recent post regarding new trends in Supply Chain Management Review which discusses preparing students for the work world in a pragmatic way. Perhaps it is also time to give greater consideration to the “soft skill” and leadership development as well. What are your thoughts?

Joy White
Supply Chain Leader
IBF Ambassador

Joy White

At the IBF conference last month in Scottsdale Arizona, there were many interesting presentations and discussions regarding new product forecasting.  While the organizations were discrete, ranging from children’s clothing to pharmaceuticals, the challenges remain quite similar.  If accurate forecasting of new products is essential to a company’s growth and profitability, why is it so difficult?

Product forecasting is difficult, new product forecasting is even more difficult. Forecasting is tedious, time consuming, and error prone. However, new product forecasting can be very rewarding, because a large portion of sales comes from new products. The forecast is never 100% right, but it is possible to build a solid forecast and that is accomplished through integration and collaboration.

Steve Tribou, VP of Sales Forecasting and Planning at Carter’s/Oshkosh discussed how the development of “Account Plan Quantification” helped bring an analytical perspective and ultimately facilitate a more collaborative process. Steve’s narrative of events that took place prior to a more collaborative process appears to be very common amongst organizations.

Planning is hard, everything is constantly changing, and it is not as easy as developing the plan and executing to it. In the planning process we must deal with all of the interim change and therein lies some of the chaos we encounter. In an effort to achieve improved business results, we must focus on continuous alignment, realignment and synchronization.

For simplicity, although this is not a simple or linear process, let’s break this down into 3 stages. In his presentation, Steve acknowledged the presence of similar activities in the pre and post collaboration stages as well.

Pre-collaboration Processes

The pre-collaboration stage could be described as a bit chaotic. There was disconnect in the communication – in fact there were various methods of communications. Has anyone ever experienced this when attempting a seasonal planning session? Along with various methods of communication comes varying opinions. There is generally not a lack of people or opinions; it is generally a lack of the right actions. The move from pre-collaboration stage to collaboration is a journey and is often marked with some very tough discussions, distrust and challenging obligations.

The Transition Phase

We all know the difficulty of change should never be underestimated. For any process change to be effective there needs to be adoption across the organization. Generally, we see some early adopters, the meetings start to get interesting, the curiosity factor heightens, and there is movement. There is oftentimes a lot of “push -pull” in the organization.   It is during this time where the journey begins to take shape.

Post-Collaboration Processes

This stage is where the process begins to grow and mature. Trust, which is an essential component, begins to build in and across various business units.  A cadence starts to kick in and while this can be very subtle, it is increasingly felt within the organization and is ultimately manifested in an improved forecast. It must be noted a collaborative process requires continuous improvement and is therefore a continuous journey.

Implementing any collaborative process can be likened to Tuckman’s 4 stages of group development, Forming, Storming, Norming and Performing. The challenges are similar regardless of the industry or the size of the organization. The complexities however, do scale with size and with the degree of integration within the organization.   In my own prior experience, I was part of a large national retail corporation that went from a fully decentralized inventory management process to a centralized process. This was a huge undertaking that took nearly 6 years to complete. Much like the presenter commented at the IBF Conference, the initial period presented major challenges and very difficult conversations. This is all a part of progress.

Joy White
Supply Chain Leader
IBF Ambassador