Supply Chain leaders in mature organizations know that a well-designed S&OP process can help improve the top and bottom lines while maintaining customer service levels. When cross-functional departments align and act on one set of goals, projections, and plans, both the organization and its customers benefit. Consensus demand planning will bring greater ROI to cross-departmental collaborative planning.
So, what is holding organizations back from reaping the full rewards of S&OP? Well, supply chain execs could face challenges during S&OP initiatives due to the lack of an agreed-upon set of informational inputs and outputs to be provided by each function during the consensus demand-planning process. Without full and accurate participation from each department, the benefits of S&OP diminish.
Suggested inputs by department:
|Department||Time Horizon||Granularity||Hurdles||Input to S&OP|
|Marketing||12-24 months||Brand/Family||Marketing forecasting bias (typically over-forecasts)||Time-phased volume/revenue and profit forecast based on brand and portfolio activities|
|Sales||3-6 months||Brand/Family with historical markers OR Item/Location/Customer breakdown for NPIs or items undergoing market changes||Sales forecasting bias (typically under-forecasts)||Time-phased volume/revenue forecast based on sales activities in the marketplace|
|Product||12-18 Months||Brand/Family/Item||Product development bias (both over- and under-forecast)||Time-phased view of product innovations deletions, and modifications|
Consensus Demand is a pivotal milestone to reach in planning efforts that undoubtedly brings greater ROI to cross-departmental collaborative planning efforts. Bringing Marketing, Sales, and Product into the fold is an important and delicate task that ultimately proves to benefit both customers and the c-suite by enhancing service levels and moving the top and bottom lines.
Departmental insight should be applied after the baseline forecast has gone through a best-fit analysis. Then, the demand planners should appropriately adjust the departmental forecasts accounting for any inherent bias, and finally combine them with the best-fit forecast. Finally, after alignment with financial goals, a true Consensus Demand Plan can be locked down, which will better serve the company and its customers. Below is an example from our partner, Neways, on how a “build-up” to Consensus Demand looks.