Four Strategies for Smarter Demand Planning

Line Art

Organizations cannot underestimate the COVID-19 pandemic impacts and disruptions on-demand planning.  As a result, organizations have found themselves in a rapidly changing environment that is more complex, volatile, and uncertain than ever before. 

Over the past 15 months, disruptive events have exposed the challenges growing over the past decade – SKU proliferation, new distribution channels, shorter product lifecycles, and more demanding customers.  As a result, the statistical forecasting techniques based on historical data that organizations have previously relied on no longer holds up. 

The decisions facing executives and demand planners and the data required to analyze those choices effectively has increased, while the time necessary to analyze the data has shortened.  Under the pressure of time and overwhelmed by enormous amounts of data, the majority, 62%, of executives rely on their “gut feeling” to make strategic decisions.  While human wisdom is essential to demand planning, it does not consider the big picture and underlying trends in demand. 

The good news is that now most organizations have an undeniable call to action to transform their supply chains and move past traditional demand planning to a unified predictive planning platform, like Vanguard Predictive Planning™.  Here are four strategies to better the demand planning process with a modern planning solution.

Artificial Intelligence and Machine Learning 

Forecasting demand does not just assist in demand planning; it also enables organizations to shape the direction and respond swiftly to changes in the market.  Demand planners need their forecasts to be accurate and have an impact on the market.  To do this, they need to generate their forecasts early to allow organizations to act effectively on their predictions.  Artificial intelligence (AI) and machine learning are valuable tools to address the need for speed in demand planning. 

Done right, the power of AI and machine learning builds a better forecast and puts that power directly into the hands of the planners.  Vanguard Predictive Planning™ leverages advanced AI applications to automatically make prescriptive decisions using predictive forecasting, simulation, and optimization data. 

Vanguard Predictive Planning™ makes AI-enabled forecasting accessible to planners so they can accurately predict demand, model multiple scenarios, and uncover trends to make swift and well-informed decisions.  Planners can easily incorporate large data sets that span historical, internal, and external data.  The ability to increase data volume combines with automation to allow for more accurate and continuously improving forecasts. 

Collaboration 

No organization could say that their demand forecasts were accurate enough when the pandemic hit; too much was changing too quickly.  Dealing with complexity at speed produced more pressure.  In some cases, planners found themselves faced with too much data to model effectively.  Forecast inaccuracy became a new reality, as did the need for insights on how business decisions affected other plans. 

To overcome this, organizations must emphasize collaborative planning, with all parts of the organization contributing and taking ownership of business outcomes. 

The ability to plan collaboratively drives better outcomes by connecting key stakeholders to how decisions impact other planning processes within the organization.  Vanguard’s Collaboration Hub™ also allows users to tag, notify, and share analytics or reports with key stakeholders within and outside the organization. Thus, our hub enables information-sharing that promotes supply chain planning success. 

Country Malt Group, a North American-based distributor of craft beverage ingredients, used Vanguard to communicate with procurement about the changes in demand at the beginning of the COVID-19 pandemic.  This process traditionally would have taken weeks, but with Vanguard’s insights, they were able to quickly respond, react, and communicate changes to plans at a moment’s notice. 

Segmentation and Rationalization 

Another strategy for dealing with complexity is segmentation:  using product attributes to divide into groups and associations that share common characteristics or behaviors.  For example, food manufacturers may have perishable and non-perishable goods, which need different treatment in shipping and stocking.  Segmentation simplifies the forecasting process for planners by allowing large groups of products to be managed together. 

In addition, the proliferation of products offered has, in many cases, made legacy segmentation policies obsolete. Instead, modern solutions allow organizations to make strategic decisions on SKU rationalization.  This method reduces the number of SKUs based on underperformance or duplication. 

The combination of segmentation and rationalization enables organizations to control product portfolios better and improve their bottom line.  Modern solutions use AI and machine learning to find links and associations in large volumes of data to automatically divide and pull out underperforming segments more quickly and accurately than a human could. 

What-if” Scenarios 

As the demand forecasting and planning process is made more efficient and accurate, the delay between insight and action diminishes.  Modern solutions move organizations from reactively forecasting demand to a proactive one.  By becoming proactive planners, organizations can begin to run multiple scenarios and ask, “what-if?” 

At this point, planners can explore the impact of changing assumptions or actions, seeking the optimal outcome for the organization.  This analysis also lets organizations better pivot to rapid changes in the external environment.  Vanguard Predictive Planning™ offers complete support for unlimited what-if scenarios that are saved and shared across the platform, allowing planners to reach consensus on decisions before disruption hits. 

To learn more about new ways to improve visibility, speed up decision-making, and make your supply chain resilient, register for our upcoming webinar:  Outperforming the New Supply Chain Normal on June 23rd, 3:00-4:00 PM EST.  Join Brian Lewis, EVP of Product, for a platform demo and see how Vanguard’s unified suite of demand, supply, and sales planning solutions save you time, improve operations, and leave you better prepared to mitigate supply chain disruption.