How to Navigate Demand Planning: Best Practices at Scale
Demand planning creates a fundamental template for success at Service Supply Chain (SSC) companies. It transcends individual teams, functions, goals, space, and time. That may sound lofty, but demand planning truly is the fabric of your SSC enterprise.
Once you’ve established a solid demand plan, all of its respective threads – from inventory management to field services – can effectively serve their purposes. That said, the process of demand planning may appear overwhelming without the right tools and methodology. This article will cover the contours of demand planning, how to navigate it during challenging transitions, and ways to keep it simple.
Demand Planning Defined
Demand planning is the comprehensive process of forecasting customer demand, as well as how to meet this demand in the most efficient way possible. It involves analytical prediction, stock optimization, coordinating efforts across teams, and transportation strategy. The goal? To drive profitable growth, which means meeting customer expectations in the most cost-effective way possible. Solid demand planning starts with demand forecasting – an essential, but singular piece of the demand-planning puzzle. Demand forecasting involves generating an estimate of future demand for every part at every potential stocking location based on historical sales data, market trends, seasonality, Installed base, technician skills, and other contextual influences. Demand planning includes all the functions that help you take action on forecasts to reap results.
Both operational and strategic, demand planning requires deep analysis as well as broad visibility. This is hard enough to achieve in a vacuum with static variables, but customers evolve, and you must evolve with them.
Demand Planning During New Product Introductions
What happens when your previously reliable demand plan collides with the uncertainty of product transitions? Knowing how to move your customer base forward onto your next-generation products and planning accordingly is critical to optimize your business. In the case of new product introductions, relying on historical sales data alone is insufficient. Instead, with the help of tools like artificial intelligence (AI) and machine learning (ML), you must make sense of the unknown using data around comparable products, market research, and other economic indicators.
Robust communication is key to gracefully transitioning your customers from older products to newer ones. This includes communication with all essential parties: customers, salespeople, partners, marketers, and field technicians. Companies develop new products for a reason – usually to fill a perceived gap in the market or to solve problems in a new way. You can harness the inspiration for developing that new product to help inform customer-facing messaging. But for this strategy to work, you must get your sales, service, and marketing forces on the same brain wave.
When you update one of your offerings, how do you ensure all interested parties in your organization know about it and can represent it in the most impactful way possible? We recommend using a unified platform with real-time alerts to help operationalize cross-functional communication. Once you have armed your troops with the right messaging and training to promote and install your new product, you also need a way to track how customers react to it and then feed that data into your demand forecast.
Demand planning during new product introductions requires creative approaches to communication, as well as creative approaches to using obsolete material. In other words, do not let your messaging get lost in translation or let your material get lost in transition. How can you continue to make use of older products while you shift to new ones? Some customers may opt out of the transition, so they are an obvious market for your older material. Others may want to hold off on transitioning to the new product, allotting a window of time to cycle through older material.
Furthermore, some material may still have functional value for the new products, but it might require modifications or come into play from a new angle. Again, you need a way to keep track of material-related insights and disseminate that data across teams to minimize waste.
Set Customer Expectations, Know What to Expect from Customers
“Minimizing waste” does not mean accumulating as much material as you can – that will result in confusion and unnecessary storage costs. It means zeroing in on exactly what to have on hand and where to best keep it, whether it is older or newer material. Knowing when to hold back on stocking or when to do some spring cleaning comes down to understanding your customer base through and through – the crux of demand planning. It also comes down to your ability to keep your organization aware of what is in stock and how it may help them achieve their daily tasks.
Some field service organizations do not even know what parts live on their trucks, and if something goes missing or gets purchased, they fail to relay that information back to interested parties. Obviously, this lack of communication will lead to many unnecessary costs, from the material itself to storage and transportation, and even increased gasoline use as heavier trucks require more fuel.
When your workforce lacks essential information, it also makes it difficult for them to set customer expectations, which is vital during product transitions. You need to know when your replacement part will be available, for example, and your customer must be able to rely on you for accurate information. If you struggle to set expectations for customers, you will struggle to know what to expect from them, making demand planning almost impossible.
Set the Scene for a Better Plan
Successful demand planning requires you to fully understand customers’ needs, how they are responding to your offerings, and how their consumption habits will shift over time. It also asks you to seamlessly disseminate information across your organization to bring your plan into action. Do you need a way to maintain control-tower oversight of your inventory, harness predictive insights, and share information with the right people at the right time? Check out our predictive Service Supply Chain platform, BaxterPredict.