Heal of Business: Demand Planning
Demand Planning is a discipline of reaching a foresight for future customer demands in a combination of art and science. The ultimate goal is to reach a desired balance level between products or services that a company supplies and level of demand customers asks for. The process is not only limited to estimate the upcoming demand, but also search for a harmony between the mix of all product portfolio with ambition to reaching optimal level of gross sales and profitability.
Looking back to the history of demand planning, the origin belongs to Operational Research studies, born in military. OR studies are the main initiator of all Industrial Engineering activities. It is solid that IE is a science of optimization. However optimization does not mean getting the best always but reaching acceptably good solutions in a reasonable amount of resources such as time, manpower and expenses. The later technique is called as heuristics.
Turning back to the current business environement, DP is set in various structures in the organization charts. Especially in small sized companies, the function is managed by the marketeer herself. She is responsible for making the product estimations together with her own marketing duties. In medium sized companies, DP is part of the supply chain department and generally responsible for the supply chain part as well. Here, the planner focuses on operational calculations and order replenishment process. This yields the shift of main importance from estimation to the inventory control. On the other hand, the big-sized companies distinguish it as a department and linked directly to country general manager and/or global vice presidents of Marketing or Supply Chain. The core expectation from this role now becomes the estimation and providing direction to the business. add small chart
However the best explanation of demand planning is told by John Lennon, life is what happens to you while you’re busy making other plans. Thus our job is not only planning but planning with highest flexibility possible.
Despite accepting that it does not create sales or gain customers, one should secure that Demand Planning is in the heart of the business.
There are various details above that I mentioned above but not structured yet. Those will be available in further readings.
Born in Ankara, 1980, having BSc and MSc degrees both earned from Industrial Engineering Department of Bilkent University, Ankara, Turkey.
In my 12-year professional experience, I worked in various markets from downstream oil, construction, chemicals to upstream retail, diary, direct selling and fast-moving consumer products. Besides the whole demand planning touch, my responsiblities had a wide range on to production planning, inventory management, procurement, marketing, promotions, pricing and gross margin management.
Feel free to reach me via barisnurlu@gmail.com.
