80% of companies are not in front of their demand. How can you decide what to plan for if you don’t know where you are going? You don’t! Thus, it makes sense to spend time upfront to determine your best estimate for customer forecasts and your demand plan. Don’t worry about perfection as the definition of a forecast is that it will be inaccurate; however, you can get in the ballpark. By achieving this goal, you will better serve your customers, grow your business and improve margins.
If you are unsure where to start, consider digging into the following:
- Talk with customers: Pick up the phone and find out what is happening with your customers. Are they promoting certain items? Or focused on specific locations? What are they seeing in terms of demand further down the supply chain?
- Talk with Sales: Certainly Sales should be staying on top of what is important to customers. Ask Sales which products, categories, and/or customers should be the focus.
- Talk with Customer Service: Customer Service can often be overlooked as they might not be perceived as strategic; however, they can have extremely valuable insights into customer demand. Customers are likely to tell them about upcoming demand, challenges, and other valuable information about the customer.
- Ask for demand data: Often times, customers will have information about what their customers are purchasing. Ask for the data that pertains to your items. If you are able to gain data, you can perform analysis of your customers’ customers’ preferences. It can yield a goldmine of information.
- Look for market intelligence: What does your market project? For example, if you are in aerospace, you will likely track the number of airplanes Boeing, Airbus, etc. are producing. You’ll then be able to extrapolate what your forecast is likely to be. Even if you are not in an industry with long-term market intelligence discussed in the news, market insights will still exist. Knowing your industry can go a long way!
Generating a demand plan that is a reasonable representation of your company’s growth is the first step to implementing a SIOP (sales, inventory, & operations planning) process which can yield substantial results. It starts with superior customer service and delivers profit and accelerates cash as you optimize and balance your demand with your supply.