Demand Planning: Value Added vs. Cost Center

Mike Wachtel - Loreal

Mike Wachtel - Loreal

“Demand Planning”, “Forecasting”, “Brand Operations”, and “Planning” These are not only terms that you will find on my resume, but also the answer I’ve given in social settings when asked what I do for a living. I’ve yet to give an answer without receiving the inevitable follow-up query: What exactly is a Demand Planner? Brand Operations does not roll off of the tongue quite like Doctor, Lawyer, Marketer or Sales Executive.

In today’s cost-conscious environment it is more important than ever to define the value of what we do as Demand Planning & Forecasting professionals. As a head of Demand Planning functions at L’Oreal USA I am competing for resources with departments that have clearly defined roles such as Marketing, Sales, Finance, Manufacturing, Distribution, etc.  In addition to this challenge, my role in Demand Planning is one that often has no natural “home”. To some we’re part of the Division, to others we belong in Operations.  Other challenges to defining the value of Demand Planning & Forecasting professionals are questions such as “What is our added value?” and “Why invest more in this area if the forecast is always wrong anyway?”

Those who know me are aware that I could go on for some time on what is the exact function of Demand Planning and its critical role to the company. I’ve promised the IBF to keep my Luncheon Keynote presentation at the upcoming conference in Orlando under an hour. I look forward to not only discussing some of the challenges we face in today’s landscape, but sharing some thoughts on where I feel we need to be focusing on in the future. A future where the question should not be about what demand planning does, but how could we possibly function without it.

Michael Wachtel, Vice President Demand Planning
L’Oreal

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2 Responses to Demand Planning: Value Added vs. Cost Center

  1. Some years ago I asked myself the question what made the difference between forecaster and demand planner. And probably I’d be quite stressed to explain it to somebody else.

    Today I define the attributes of each the following way:
    – Forecaster is responsible for preparing the most accurate estimate of the most probable demand for specific SKU during specific period of time.
    – Demand planner is responsible for educated buffering against unavoidable forecast error and working out the optimal inventory policies in order to meet cost/service targets effectively and efficiently.

    I’d be happy to hear other opinions.

  2. A demand Planner enables the organization to take decision on What to be stocked & what not, how much to be kept. How to nullify the abnormal sales while deciding future trend, & correcting base line. Creates SKU level planning on Stock norm, Safety Stock, measuring the forecast accuracy. The Demand planner also helps you in rationalizing the assortment and ABC classification.
    They are the bridge between Sales Team & Purchase Team.

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