Supply Forecasting and Demand Management Inputs are Critical to an Integrated Business Planning Model

  • 8 August 2016
  • Number of views: 9186

Effective balancing of Supply and Demand contributes significant benefit to Integrated Business Planning; a joined-up approach delivers this most effectively

Supply and Demand planning should achieve four goals:

  1. Cross-organisational consensus of actual customer demand (vs annual budgets or forecasts)
  2. Reliable information to enable the production, distribution and purchasing processes to run efficiently in the short and medium term
  3. Identification of any shortages, scares resources or risks associated with the supply side, or products for optimizing strategic goals or profit maximization
  4. Clarity on any potential gap between demand and budget/forecast, in order to close the gap or reset targets

The four key principles for Integrated Business Planning are clearly visible in supply and demand planning:

  1. Both ends of the supply chain (customer demand and supply availability) are joined up through a robust, cross-functional forecast management model
  2. Discipline throughout the business (correct cadence, appropriate tools, sound metrics and reporting) is supported by a similar approach from suppliers
  3. Critically, IBP is C-suite sponsored in both client and supplier companies
  4. A lean approach to deployment is undertaken – pilot, test, deploy, refine

Supply forecasts and demand management inputs assist in achieving the balance of inventory to output required in a lean production environment

Accurate supply forecasts support an effective supplier management function by:

  • Ensuring clarity of objectives between both parties
  • Driving for maximum integration of supply chains (stock levels, lot sizes etc)
  • Aligning cadence and reporting structures
  • Driving costs out of the supply side by consistently reducing waste, rework and waiting

Demand management is most positively affected by common sense and cross-functional collaboration

  • Demand and order management should deliver the business strategy, not constrain it
  • Maximum benefit is achieved when the teams involved take ownership of the process and outcomes
  • A pragmatic approach to the tools and processes applied, and avoiding the one-size-fits-all mentality will deliver better outcomes faster 
  • The degree of granularity, and the frequency of planning must align with both ends of the order management process, not drive it.

To find out how WBS Group can assist your supply and demand management in your organisation simply contact us for an initial FREE no obligation consultation.

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