We are often so busy using statistical models or trying to understand machine learning when our customers may have some of the answers already. Your customers can give you valuable data like the real sales figures, trends and promotional data that will impact future demand. Getting this treasure trove of data from your customers can really help with forecasting accuracy – so ask them for it!
The First Step In Getting Valuable Customer Data
Many of your customers may still want to keep their data close to their chests but times are changing, and more customers are willing to share data if it makes business sense. But remember, to get access to their data, you must ask for it. It is a matter of finding the right contact inside their organization. Perhaps someone in your organization is already connecting with someone on the inside. Reach out to them to investigate who holds the necessary information.
Once someone is identified, ask to set up a quick call. Don’t get discouraged if you don’t get the answers you seek right away – it may take a few weeks to find the right person. The person who has what you need may not even know it. Engaging with the customer will help identify what information is available and which data can help you.
What’s In It For The Customer?
If your customer is going to give you their data, they’ll want something in return. Most likely they will want to be given priority over other customers when it comes to order fulfilment. Also, remember that whether you are working with just a few customers or hundreds, they all utilize the same types of data and like us, try to make sense of it to predict demand. We demand planners can help with this by offering our analytical expertise.
It may take some time to establish the trust needed to make this collaboration work. Once you have that contact, remember their time is valuable so be very precise in what it is you want. Establish a monthly touchpoint meeting to see how things are going and what you can do to help improve the process.
What Customer Data To Ask For
You want to understand what data they are willing to part with. Questions to ask your customers include:
How is the product selling?
What is the trend for sales?
Do you have any promotional activity within our planning horizon?
What inventory do you have on hand?
Will fiscal period ends have an impact on orders?
Do you utilize your own forecasts and how far out do they go?
The answers to these questions are highly valuable and can improve your forecast accuracy significantly. Establishing a positive relationship is key to obtaining this data. Any and all of this can supplement your planning and help you make important demand planning decisions.
Putting The Customer Data To Work
Utilizing multiple data points is common in demand planning and the data from customers is no different. Be sure you can structure this data in a way that is easy to utilize. You do not want to miss an opportunity to understand your customer. This structure will allow you to utilize this volume data for your monthly demand reviews.
Once you have the valuable customer data, you will need to understand how to translate it to align your communication in a way that will signal the appropriate forecast to your supply and production partners. Start with supplier SKU to customer item. Selling, shipping, ordering and forecasting units may all be different. Find the common denominator. You will want to be certain you are matching up the data correctly and forecasting the correct volumes.
Pulling It All Together
Customer collaboration is the key to demand planning success. Is the customer data always right? No, but it is never wrong. As demand planning professionals, it is our job to accurately mine their data and be sure it makes sense. The beauty of establishing a collaborative relationship is that if you see something way off, you can start asking questions and protect both you and your customer from false assumptions about future demand. Or indeed, you may get true insight into demand that you weren’t expecting at all, and as a result you can plan accordingly.
Demand planning and forecasting is both an art and science. The amount of data we have available to us is growing, and strategies are changing. But building trust and establishing customer relationships are timeless, and just as important as the latest technology trend.