DEMAND MANAGEMENT & PROFIT PLANNING

Financial planning is a key element of overall business planning. If you don’t get the dollars right the consequences can be significant, effecting things like; profit forecasts, cash flow, share value, working capital, even bonuses. So how do we improve the robustness and predictability of this annual, or more regular, process?

Understanding customer demand and the variability of demand is a key to improving the alignment of your supply chain. Improving the accuracy of the demand forecast is the key driver of financial predictability for any organisation selling goods or services. A high level of forecast accuracy provides leverage for the management of the whole business. Thus effective demand management can be used to drive profit planning throughout the business.

Whilst Sales and Operations Planning is widely known, particularly in manufacturing organisations, the process is not always fully integrated. So, although there is a number which drives the provision of goods and services against the forecast, there is often a different number developed by finance for the profit performance of the business. And whilst an MRP process linked to the S&OP plan may determine purchasing requirements, sourcing is often based on a separate consumption based forecast. The sales plan often is aspirational and not linked to the inventory objectives. In other words although the business has processes in place the overall plan is not based on “one version of the truth”!!

Benchmarking Success work with organisations over a period of time to refine their S&OP process and introduce the DMaPP™ process to provide an effective and integrated profit plan linked to the demand management processes within the business.

The amount of time involved depends on the current use of S&OP processes and their understanding within the business. An initial assessment of the maturity of these processes through the completion of elements of the Supply Chain Maturity Matrix™ provides a roadmap for development of the improvement process with the business.