Whether you are on the Lean journey or not, you need a demand plan! Prior to forming LMA Consulting Group, I was a VP of Operations and Supply Chain for a mid-market manufacturer. Our Board hired a lean consultant who insisted we had to be purists – there is no in-between. If we were to embrace lean (and, who wouldn’t want to be lean, after all?), there are some lean purists who say “no need for a demand plan”. Somehow, this is what was adopted as gospel at my company; however, it was NOT accurate — assuming you wanted to service customers. From this frustrating experience along with several others in working with clients, it is apparent that the demand plan is not dead!
If we take it back to the basics, I have to wonder why anyone would ever think they didn’t need a demand plan. In essence, it is like saying you don’t need to know what you’re likely to sell, use, and transfer to other facilities. Why wouldn’t we want to understand this information? Well, the lean purists would say kanbans are connected directly to customer demand and pulls it through. Certainly that is a successful way of planning in many organizations and for “A” products especially those with those with relatively even demand. However, it doesn’t mean you wouldn’t want a good feel for your demand. It is always helpful to provide longer-term forecasts to suppliers and to use internally for staffing, skills building, etc.
And, when it comes to B and C items, seasonal items and other trending patterns, understanding the demand plan isn’t a “nice-to-have”; it is critical to success. We estimate that at least 80% of our clients can gain significant bottom line results from focusing a bit more attention on the demand plan. If you are interested in discussing further, contact us.
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