How do we define demand planning? It is the planning work that must be done to position supply chain to consistently deliver the right materials or services to its internal customers at the right time, right place, and right price. Good demand planning is absolutely essential to success in supply chain management. Some hallmarks of an effective demand planning process are illustrated below.
Why should we focus on demand planning? It has a disproportionate impact on the ability of supply chain to provide good service to its customers and meet its business objectives. More specifically, there is an exponentially greater opportunity to positively influence outcomes through improvements in demand planning than through improvements in other areas.
Every utility we work with experiences several of the key demand planning “pain points” shown in the table below.
The first step to effectively addressing these key pain points is recognizing that the supply chain organization cannot fix the problem alone but must tightly integrate with engineering, operations, and maintenance. The second step is to ensure that all of the players are clear on the key accountabilities of all stakeholders (work management, maintenance, procurement, materials management, etc.). And the third step is to manage the most essential materials, assets, or services through collaborative demand planning (CDP), which is a leading practice approach that relies on cross-functional teams with empowered participants, routine meetings with structured agendas and pre-work to support inputs, an unbiased and responsible organization running a disciplined process, and a variety of other important ingredients. CDP is not easy to do, but the disproportionate payback is worth the up-front investment of time and resources.
Moving forward through these three steps will require the adoption of a variety of leading practices that must be employed to address each pain point. But ultimately, getting demand planning right is only 40% about knowing the right things to do. The other 60% is tied to establishing the appropriate accountabilities and exhibiting the constructive behaviors that support effective planning.
To learn more about how to improve demand planning in your organization and leverage front-end improvements for a disproportionately positive impact, please contact us.
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