Demand Planning – Nomads of the Org Chart

Written by Greg Spira

Much like Godwin’s law, as any discussion about Demand Planning grows longer, the probability of debating where it fits in the organization approaches 1.

This week, like any other normal week, I’ve had at least three discussions with clients or partners that touched on or directly addressed the topic of where Demand Planning sits in the organization.  I’m always reminded of a piece of research that the IBF did surveying companies to find out where they placed Demand Planning.  The result is a pie chart with Sales, Marketing, Strategic Planning, Logistics, Operations, Finance, a “Forecasting Department”, and of course “Other”.  I can’t think of any other function that is as widely dispersed as Demand Planning.  Either everybody wants, or nobody wants them.  I’m never quite sure which it is.

While I believe the simple answer is Sales or Marketing, I’m not going to pretend that it’s an easy answer or that there aren’t significant considerations.  I remember being in charge of Demand Management reporting to the EVP of Sales and having talks with the EVP of Supply Chain to try to move my function into Supply.  At the time, the head of Sales wasn’t allowing the Demand Plan to remain free of bias.  As I’ve said in earlier posts, there is no credibility in a biased plan.

What I will share are a few of the considerations when deciding where to place Demand Planning in your organization.

  • Wherever it is, the Demand Plan must remain free of bias.  The individuals leading it must be empowered to and incentivized to achieve this.
  • It’s a plan.  We shouldn’t be spending our time trying to predict what sales and marketing will do.  We should document what we are planning to do and predict what our customers’ response will be.  This is the primary reason why placing Demand Planning in either Sales or Marketing is ideal.  Plans connote accountability and having skin in the game (pigs vs. chickens).
  • The best story wins.  The Demand Planning team must be able to articulate the plan in commercial terms, using language that the senior leadership team understands.
  • If Demand Planning doesn’t report into Sales or Marketing, it is still possible for them to be treated like part of the Sales and Marketing teams.  Leadership must, however, must set that expectation.  (COVID aside, I would advise that regardless of org structure, Demand Planners physically sit near their Sales and/or Marketing counterparts – being “close to the action” is invaluable)
  • Investments in Demand Planning tools and capabilities yield higher returns when that function is closest to commercial decision-making.  The same models and analytics that translate planning assumptions into volume projections can also be used for scenario planning.
  • Consider the career path for a demand planner.  What capabilities does your team have today, and what do you want them to have in the future?  If you can’t construct a career path that makes sense, then you won’t be able to attract the high calibre people that you need.