Effective Demand Planning provides enormous benefits to the S&OP process by converting inputs from the Finance, Sales and Marketing, and Supply functions into a robust forecast. The role of the Demand Planner requires a wide range of skills, from data analysis to negotiation to coaching. But what does Management need to provide to ensure Demand Planners add value to the S&OP process? The 5 key components are:
- Alignment with leadership
- Leverage/influence with key departments
- Independence
- Well-defined job definition and performance metrics
- Opportunity for career growth/change to avoid burnout
Let’s examine why these are important.
Alignment with Leadership
A Demand Planner can only be truly effective if the company leadership recognizes the value of planning and openly supports it. This can mean that the numbers presented do not always meet the leadership’s expectations. When this occurs, there is an opportunity for all the teams to evaluate what they need to do to get the program in line with the plan. In doing this, they answer to the leadership team directly, and not to the Demand Planner. This drives conversation around where the plan may need to change, or where there is opportunity within the business, and includes all the team and management levels that impact the forecast.
If the Demand Planning role is supported by the leadership team, leverage and influence naturally follow.
Leverage And Influence With Key Departments
If the Demand Planning role is supported by the leadership team, leverage and influence naturally follow. However, I have often heard Demand Planners complain that no one listens to them. When this occurs, much of the value of their role is lost. It should not be the Demand Planner’s role to beg for others to listen to them. If their role does not carry significant influence with the other teams, it can be very frustrating and may lead to burnout and turnover in this key position. And ineffective planning can undermine the entire S&OP process.
Independence
The Demand Planner’s primary goal is to present a plan that matches reality – not what people wish will happen, but what will most likely occur. To do this well, the Demand Planner’s decisions need to be free from the influence of other departments. Otherwise there will be a bias toward one set of metrics vs. all the others. This means that often no department is fully satisfied with the consensus forecast. And if the forecast reflects the most likely reality, that’s OK.
I’ve seen Demand Planning positions where the planner was also doing customer service, master data maintenance and even sales training.
Well-Defined Job Definition And Performance Metrics
Planning takes focus. It can’t be done well if there are too many other competing responsibilities assigned to the demand Planner. I’ve seen Demand Planning positions where the planner was also doing customer service, master data maintenance and even sales training. Defining how a planner should be spending their time – and keeping distracting tasks away – is vital in allowing the planning function to flourish. And having realistic performance metrics that include both hard numbers (bias, MAPE, etc.) as well as soft skill goals can make the Demand Planning job more effective and also provide for career growth.
Management support, ability to move into different roles, and opportunity for promotion are key to stopping Demand Planners from burning out.
Opportunity for Career Growth/Change to Prevent Burnout
Demand Planning is challenging. Even when planners are properly supported, there is a limit to how much they can achieve in a given position. Management needs to recognize this and provide for opportunities for moving planners who are in this situation to another area in a similar role, or, where appropriate, to move into a supervisory or training role. Failure to do this can result in burnout and turnover, and both of these will undermine the value of the Demand Planning role.
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Conclusion
Demand planning – when done correctly – provides enormous benefits to an S&OP program. And to gain the most value from the people who take on this role it is vital that these people receive proper support. Without this support the role of Demand Planning cannot deliver the value that we need in today’s S&OP programs.
To ensure that Demand Planners have the support they need, we will need to educate company leaders about the value this role can have if it is properly supported and executed. While some leaders may resist the idea that this role is vital to an effective S&OP process, those leaders that do embrace the value and support the role will give their company a significant competitive advantage in lower inventory costs and improved service levels.