Who Are The Customers of the Demand Plan?

Written by Greg Spira

When we use the term customers in the context of demand planning, most often we are talking about the people that buy our products and services.  However, it is equally important to think about the internal customers of the demand plan – the functions within your company that rely on the demand plan as a critical input to their functional activities.

Traditionally we think of the primary customer of the demand plan being supply chain.  Particularly in make-to-stock businesses, supply chain is forced to make decisions about capacity, sourcing of materials, and production of goods well in advance of customer lead-times.

Supply chain is not the only customer, however, and different functions have different needs. Commercial teams may need different levels of detail over different time horizons to effectively plan and manage demand.  We may intuitively think that manufacturing lead times are the longest, but investment decisions around promotional activities and commitments with retail customers may need to be made many months in advance.

If the demand planning process is not fulfilling those needs, then those functions will naturally take matters into their own hands and create their own plans.  This leads to effort spent reconciling different plans, confusion, misalignment, and often costly mistakes.  Companies struggle to achieve a single operating plan when there is no single plan that will serve the needs of all stakeholders.

Solving this is not easy.  Serving the needs of many stakeholders requires more effort than serving the needs of one.  Plans may need to be represented in volume and value, by customer, by product, and may need to consider sell-in, sell-through, sell-out, and channel inventories. The demand planning team may not be adequately supported with tools, resources, or incentives to do this effectively.  One response is for organizations to dive planning down to the lowest common denominator and use tools to pivot the data in different ways. This does not address the problem of ownership though.  Having the capability to pivot data will not stop people from saying “that’s not my number”.

If you really break it down, it is an Executive Leadership problem. The executive leadership team must change their expectations of planning, how future projections are communicated, and how decisions are made that ensures alignment on a single plan, or what we call “one set of numbers.”