We are often so busy using statistical models or trying to understand machine learning when our customers may have some of the answers already. Your customers can give you valuable data like the real sales figures, trends and promotional data that will impact future demand. Getting this treasure trove of data from your customers can really help with forecasting accuracy – so ask them for it!

The First Step In Getting Valuable Customer Data

Many of your customers may still want to keep their data close to their chests but times are changing, and more customers are willing to share data if it makes business sense. But remember, to get access to their data, you must ask for it. It is a matter of finding the right contact inside their organization. Perhaps someone in your organization is already connecting with someone on the inside. Reach out to them to investigate who holds the necessary information.

Once someone is identified, ask to set up a quick call. Don’t get discouraged if you don’t get the answers you seek right away – it may take a few weeks to find the right person. The person who has what you need may not even know it. Engaging with the customer will help identify what information is available and which data can help you.

What’s In It For The Customer?

If your customer is going to give you their data, they’ll want something in return. Most likely they will want to be given priority over other customers when it comes to order fulfilment. Also, remember that whether you are working with just a few customers or hundreds, they all utilize the same types of data and like us, try to make sense of it to predict demand. We demand planners can help with this by offering our analytical expertise.

It may take some time to establish the trust needed to make this collaboration work. Once you have that contact, remember their time is valuable so be very precise in what it is you want. Establish a monthly touchpoint meeting to see how things are going and what you can do to help improve the process.

What Customer Data To Ask For

You want to understand what data they are willing to part with. Questions to ask your customers include:

How is the product selling?

What is the trend for sales?

Do you have any promotional activity within our planning horizon?

What inventory do you have on hand?

Will fiscal period ends have an impact on orders?

Do you utilize your own forecasts and how far out do they go?

The answers to these questions are highly valuable and can improve your forecast accuracy significantly. Establishing a positive relationship is key to obtaining this data. Any and all of this can supplement your planning and help you make important demand planning decisions.

Putting The Customer Data To Work

Utilizing multiple data points is common in demand planning and the data from customers is no different. Be sure you can structure this data in a way that is easy to utilize. You do not want to miss an opportunity to understand your customer. This structure will allow you to utilize this volume data for your monthly demand reviews.

Once you have the valuable customer data, you will need to understand how to translate it to align your communication in a way that will signal the appropriate forecast to your supply and production partners. Start with supplier SKU to customer item. Selling, shipping, ordering and forecasting units may all be different. Find the common denominator. You will want to be certain you are matching up the data correctly and forecasting the correct volumes.

Pulling It All Together

Customer collaboration is the key to demand planning success. Is the customer data always right? No, but it is never wrong. As demand planning professionals, it is our job to accurately mine their data and be sure it makes sense. The beauty of establishing a collaborative relationship is that if you see something way off, you can start asking questions and protect both you and your customer from false assumptions about future demand. Or indeed, you may get true insight into demand that you weren’t expecting at all, and as a result you can plan accordingly.

Demand planning and forecasting is both an art and science. The amount of data we have available to us is growing, and strategies are changing. But building trust and establishing customer relationships are timeless, and just as important as the latest technology trend.

Do your suppliers recognize your company as a Customer of Choice? What does this distinction mean and why is it important? A Customer of Choice is one that suppliers consider a preferred customer for a number of reasons, such as having a talented workforce, using integrated management systems and global processes, and having innovative approaches to supplier collaboration. Customers that achieve this distinction unlock new sources of competitive advantage because of their suppliers.

When suppliers recognize that they’re working with a Customer of Choice, they often make exceptional efforts to meet that customer’s needs. In these situations, suppliers often assign their most talented employees, secure scarce resources, provide additional discounts, prioritize production capacity, give early access to new products, or go out of their way to solve the customer’s problems and help them be more competitive in global markets.

Preferred Customers Get Special Treatment

According to a survey of senior sales executives, 75% of suppliers say that they prioritize preferred customers when materials or services are in limited supply. The same survey also showed that 82% of preferred customers consistently get early access to new products, services, ideas, and technologies.

Imagine the benefits of being the “Customer of Choice” over a 5-year or 10-year period, such as reduced costs and new technologies. The supplier can also give you exclusive key insights to which your competition would not have access – which ties into building an effective Collaborative Planning and Forecasting Replenishment (CPFR) process.

So how does your organization become recognized by its suppliers as a Customer of Choice? It begins with an inward reflection and assessment of how your suppliers view you as their customer so that you can start to change your organization’s behavior. Let’s look at 3 things you can do to become a Customer of Choice:

Step 1: Put Yourself In Your Supplier’s Shoes

You must examine whether or not you hold yourself to the same expectations and standards of performance as you do your suppliers. Have you heard the saying, “if you’re going to talk the talk, you’ve got to walk the walk”? Well, your suppliers have the same expectation of you as they have for their customers. If your organization can set the bar for how to manage your supply base, you’re moving one step closer to becoming a Customer of Choice.

Assess your current practices and the challenges you face with your suppliers with an unbiased and critical eye so that you can uncover opportunities to improve how your organization communicates and collaborates with your suppliers. You might even consider conducting anonymous supplier surveys in the same way you conduct employee surveys within your organization so that you can learn what is and is not working well for your suppliers.

Step 2: Enhance Collaboration, Transparency, & Visibility

Old ways of managing suppliers are manually intensive, disparate, authoritative, one-sided, and subsequently ineffective. Global Supply Chains require information to be readily available and shareable in real-time. Changing the conversation from one in which suppliers simply fulfill their contractual obligations to one of suppliers as strategic partners goes a long way to increasing engagement, ownership, and collaboration to solve tough problems.

Using modern integrated tools like Intelex’s Supplier Management solution helps to increase transparency and visibility within global organizations and with their suppliers. Processes become standardized and easy to follow, which helps reduce variation in managing supplier certifications, corrective actions, specifications for products, product management, and incoming inspections. Ultimately, these tools help employees at both the buyer’s and seller’s organization to focus their efforts on value-added activities that impact customer satisfaction.

Step 3: Make Customer of Choice an Organizational Objective

Rather than rallying employee engagement around a soon-forgotten special training event or workshop dedicated to the concept of “Customer of Choice”, organizations must engrain Customer of Choice within corporate objectives. Establishing metrics that teams use to monitor the company’s progress throughout the year helps move the needle towards realizing this goal. Through self-assessments, supplier surveys, supplier complaints, and investing in projects that help improve the supplier experience with your organization, you can identify and act on innovative opportunities to improve processes.

To achieve any lasting change in an organization, you must encourage behavioral change so that the path to becoming a Customer of Choice becomes embedded in the thinking, training, processes, tools, metrics, and decisions you use on a daily basis to achieve superior supplier performance. The benefits of being a preferred customer are clear – and when things go wrong causing supply to be constrained (and at some point they will), it can be a Godsend.

Interpreting market demand data is one of the most vital concepts in Demand Planning.  Effective management of demand greatly improves responsiveness and positively impacts consumers, inventory levels, go to market strategies, and ultimately, revenue. But this is a lot easier said than done because the consumer of today wants the same experience, availability and assortment across online, in-store, and via third party distributors.  

In addition to understanding consumer behavior and being one step ahead, we need to understand consumer sentiment and create an experience around how individual customers want to buy. We mustn’t assume we can meet consumers’ needs by only reacting and to sales orders alone – we need to understand  true demand. This true demand may not even be what the end consumer actually bought, but what the customer intended to buy.

To serve the right consumers with the right products at the right time, a good estimate of demand is crucial and it cannot be done in a functional or company silo. It requires the involvement of many parties: Finance, Marketing and Sales, and Operations, but also external parties such as key customers and channel partners. The best way to mitigate lower customer tolerance is for it to be replaced by joint value customer collaboration.

Realize You Are Part Of An Integrated Value Chain

Organizations who thrive have learned that they are part of an integrated value chain, or partners in a grand synergy that comes from collaboration in data, process, technology, and innovation. For some, it is a formalized process that enables companies to work together with their trading partners like Collaborative Planning and Forecast Replenishment (CPFR) in the structured manner defined by Voluntary Inter-industry Commerce Standards (VICS). Companies like P&G revolutionized Joint Value Creation (JVC) with their partners and set the standard for what we should achieve.

Other companies call it Demand-Driven Value Networks (DDVN) or, more up to date, Joint Value Collaborative Planning. Whatever the acronym, they all work together to better meet their customers’ needs by efficiently utilizing customer and supplier competencies and insights.

The 6 Steps To Synergistic Collaboration

Over time, and through innovation, we have seen the alignment between the core processes of forecasting, ordering, and fulfilment between partners continue to improve. To accomplish these synergies in common areas such as Logistics, Operations, Supply Chain, and Demand Planning, there are six key areas of collaboration we need to focus on:

1 – Develop a Front-End Agreement and Purpose: This step is where trading partners establish the guidelines and joint vision to define the value proposition for all sides. For some, this is more detailed and includes confidentially agreements and the empowerment of resources to be employed throughout the process. Others are more informal rules of engagement but usually still cover key points such as scope, roles and responsibilities, and objectives.

2 – Collaborative Forecasting: Customers are developing consumer or store level forecasts and doing in-house promotional planning. At the same time, suppliers are developing their own customer forecasts and trying to interpret POS or syndicated data and incorporate market analysis. In this step, retailer Point Of Sale data, casual information, store opening and closings, and information on planned events are used to create a joint sales forecast that supports the joint business plan.

3 – Collaborative Order Plan: The retailer from their store level forecast has generated an aggregated order plan. The supplier, from their customer forecast, creates an estimated demand plan. From a collaborative sales forecast, neither side is guessing and we have a collaborative proposed order plan between partners. In this step,  inventory and delivery strategies are combined to generate a specific order forecast that supports the shared sales forecast and the joint business plan.

4 – Generating Orders and an Inventory Plan: This step marks the transformation of the order plan into a committed order. Order generation can be handled by either the retailer, supplier, manufacturer or distributor, depending on competencies, systems, and resources. Regardless of who completes the task, the created order is expected to consume the order plan which is aligned to the collaborative sales forecast and the result is a time-phased inventory plan at the retailer and supplier/distributor.

5 – Fulfilling the Order: Good collaborative planning does not stop at the order. In this step, the focus is on the efficient transfer of goods and inventory pooling for the retailer and the supplier, including third party distributors. For customers it is about receiving and optimizing inbound logistics and freight – for suppliers it is shipping and optimizing the outbound and deployment. This collaboration enables effective fulfilment strategies and optimization of total logistics between partners.

6 – Collaborative Performance Assessment: The age-old adage, what gets measured gets managed. Suppliers can measure on-time and in full (OTIF), inventory or other execution monitoring. Customers drive performance with supplier scorecards. In this step, aligning on a structured, disciplined, feedback performance assessment helps both sides meet the front-end agreement and objectives of the joint business plan.

Process flow to achieve the goal of a collaborative plan.

Bottom Line: Win Together Or Die Alone

Even if trading partners do not implement a formal CPFR process, any environment of trust and a collaborative interaction can greatly benefit each one of them. Those who struggling to survive in the volatile and demanding business of today can attribute their difficulty to acting as an autonomous element in their supply chain. Those who are thriving today, and those who will be able to keep pace with the consumer of tomorrow, do so by working together towards a joint vision, collaborating on demand and supply plans, and driving collective innovation. In boils down to optimal customer response, and you cannot serve your customer without collaborating with your partners.

I will be discussing the topic of CPFR and external collaboration in IBF’s Online Education Series, held on May 10th 2018. There are multiple dates throughout May dealing with a range of topics to help you plan and forecast better – you can see further details and register here. It’s a great series of seminars and I encourage you to join me.