Imagine a business that is doing better. “Better” looks like integrated business planning – a harmonious framework in which sales, finance, and supply chain operations combine long-term profit goals and short-term demand planning efforts for balanced, unified development.
Brands are currently implementing demand planning technology to help their businesses achieve harmony in times of change. Below are 7 characteristics that the most effective platforms have.
Whether you call it flexibility, adaptability, or speed of recovery, agility is essentially a company’s willingness to roll with the blows and overcome them. Brands need to be able to proactively plan, manage, and swiftly pivot when inevitable market and supply chain fluctuations arise.
Agility is made possible through the use of pioneering technologies such as AI, which can significantly improve forecast accuracy. The focus is on keeping up with cutting-edge consumption metrics that illustrate the present and the future – not just the past. With certain platforms, brands can even give key people the opportunity to enter ground-level human insights (e.g. new distribution) in real time and automatically include them in AI forecasts. This gives brands the ability to prepare and respond to anything from unexpected increases in sales to outlier events at the crisis level.
Highly accurate demand forecasts are essential for an effective IBP process as they can create an incredible domino effect throughout the supply chain:
Accurate sales and distribution forecasts Enable brands to reduce working capital, optimize marketing investments, avoid inventory levels, improve cash flow, adjust operations to meet demand, understand regional and customer demand, and optimize lead times for purchasing, manufacturing and logistics. This can also help sales and marketing teams develop tactics to increase ROI.
Accurate inventory forecasts Reducing costs associated with working capital, transfers, obsolescence, warehousing and other logistics costs; Assisting manufacturing and procurement teams in negotiating better prices, MOQs, and delivery dates with suppliers; and improve negotiations on volume cost disruptions for raw materials, components and finished goods.
3. Ability to act
In the context of demand planning, agency refers to dynamic data that shows a way forward so that you can move in one direction with a clear, confident vision.
For example, ask yourself the following simple and very important questions:
How do you measure past performance?
Do you know what is contributing to the forecast error?
What drives sales?
Having access to a platform that allows you to quickly identify and analyze these answers is the first pillar of actionability. The second is technology – artificial intelligence – which can identify both fundamental and dynamic relationships between different data sets and time horizons related to your business.
Effective automation simplifies the complicated and streamlines the complex. It’s a step killer – a feature that turns a layered process into one, while reducing the hours of manual process of reading, organizing, and analyzing data. Automation no longer means tedious manual cracking of numbers. When predictions are made with consistent data across departments, automation means faster alignment and fewer silos, giving employees valuable time back.
It typically takes hours to search spreadsheets to analyze the factors that contributed to the forecast error and how much they influenced the performance gap (actuals vs. projections). Automation, so to speak, does the heavy lifting for you and helps you focus your attention on other priorities.
Artificial intelligence can feel like a buzzword at times, but it’s essentially a set of specialized algorithms that identify dynamic relationships across datasets and time horizons faster and more effectively than a human could ever be. The more models run, the more accurate they can be. There is a common misconception that integrating AI into existing systems would be tedious and disruptive. However, it can be implemented in a few months and work seamlessly with the systems and people already in place.
In order for an IBP process to be streamlined, collaborative, and future-oriented, it must use AI. And yet the AI doesn’t know everything – it’s not human intelligence with boots on the ground. When AI combines forces with human intelligence, its dynamic calculation forms the perfect basis for teams to interpret the findings of the AI and then make decisions. Even better? Software that allows these human insights to be incorporated into AI predictions.
Alignment means almost universal cross-departmental visibility that brings everyone to the same page. Instead of your teams tackling information silos, real-time data connections across the enterprise can lead to better forecasting accuracy, consistent decision-making, and better performance.
When different teams have access to the same cross-departmental data, silos crumble and give way to dynamic decisions. For example, a sales team may sell more than planned at 1,000 doors. In trade marketing, a retailer can approve a last-minute mailer ad for a specific product. Either way, these unexpected changes are critical for all teams – Supply, Finance, Sales, Logistics, Operations, etc. – to see and act on them. Improved alignment means improved efficiency across the board.
Accountability is the gap between the effectiveness of a brand’s demand forecasting process and the operational execution behind it. Complete transparency not only about what, but also why something happened, is the key to making strategic changes in your demand planning process.
The faster a brand can understand the factors and reasons behind a forecast error, the faster it can implement the changes that improve efficiency, margins, and more. What if an order comes in as expected but fewer units are shipped, which indicates an error in forecast sales compared to actual values? Perhaps manufacturing didn’t make enough units, or there was enough inventory, but there were shipping issues as logistics lagged behind. Above all, it is helpful to quickly understand the responsibility for the error portion.
Adhering to these seven requirements planning characteristics will undoubtedly increase your chances of achieving continued or renewed success for your brand. And since change is a constant, it is imperative to have the tools to make your IBP process run like a well-oiled machine and help you handle any situation.