Demand Planning in SAP Business ByDesign – Getting started

10.09.2019

Demand forecasting is a multi-level operational process of supply chain management to create reliable forecasts. At best, you have already read the article “Demand Planning in SAP Business ByDesign – Basics“. There you will learn, for example, how important it is to make good forecasts. In the following, we will also discuss the forecasts again.

How do we start with demand planning?

1. Clean-up of the data basis:

Old data must be cleaned up and new incoming data must undergo a quality check – it should be clarified in advance which information is to be included in the planning.

2. Rely on a quantitative baseline forecast:

Historical statistics should always be your point of reference to remove distortions from the forecast, as we all have a natural tendency to over forecast. In addition, the sales team will have more time to understand the analysis of the statistical forecast and focus on outliers and act accordingly. If the tools are understood and used correctly, you can expect an increase in efficiency of 30-40%. However, if the results are applied incorrectly, the only result will be frustration. We are your expert who can help you select the right complexity for your business and ensure that you benefit from improved performance.

3. A collaborative implementation process:

We cannot emphasize enough how important it is to receive additional input for statistical forecasting from the right people, both within the company and from key customers and distributors. Demand can be influenced by a variety of factors, and far more than any statistical model can currently handle, so statistics alone are not enough! You need to be able to rely on a collaborative process inside and outside the company to get the additional, critical information about demand, such as product launches, substitutions and end-of-life products. Other types of relevant information include promotions, price changes and marketing campaigns, as well as projects and tenders that can also disrupt your supply chain. This additional required information are usually managed with overview lists. Find and agree a functioning forecasting procedure with your clients and sales partners

4. Establish a performance management:

In return for all your efforts to improve the forecast, you should also be able to measure your progress. Reducing forecasting error improves service while lowering costs and inventory, so it’s worth ensuring that forecasting accuracy is effectively monitored. In a typical situation, the supply chain generates statistical forecasting, marketing or product management provides information about advertising campaigns, new launches and legacy products, while sales provides customer data. Make sure your tool allows you to review the value of each of the different forecast versions and incorporate a feedback cycle.

5. Review of the situation:

The final step in the implementation of demand planning should be a demand review led by the demand manager or the S&OP manager. The supply chain is the only department that can be considered “neutral” in terms of sales, operations and finance and is therefore best placed to conduct demand analysis meetings. Some tips and tricks for a successful demand review meeting are: Avoid discussing the data, don’t let the sales & operations forecast deviate from the financial one, shift the discussion to value rather than volume, keep the meeting brief and concise, and prepare scenarios in case of uncertainty. All this will help you find consensus and ensure a high quality forecast!

You see that demand planning is a complex topic. We can help you to break down the complexity.