While making a good sauce often does not require as much precision as baking does, it does require a general sense of intuition. Good chefs are often able to whip up soups and sauces without measuring every ingredient accurately. They build on a base of “standard” ingredients and refine as they go along.
Improving Demand Planning
The ‘secret sauce’ concept to demand planning is a little bit trickier. Market volatilities such as changes in the weather can affect business at any given time. As such, businesses cannot rely on their history alone without considering the full picture of possible market changes. When market changes occur, businesses should be ready to adapt without disrupting the existing business processes. If you have not begun to do so, now is the time to get a sense of your most effective demand “triggers”.
This begins with creating a stable and sustainable demand planning process. And even if you have a process in place – stress test it to ensure it is not breakable. Once that is established, employ a continuous improvement strategy to make it less reactive to market conditions. Compare it to a chef modifying existing recipes with new ingredients to create a completely new rendition of an existing dish based on the freshness of ingredients and/or cost of goods.
Read Also: 6 Ways You Can Improve Forecast Accuracy with Demand Sensing
Demand sensing is a robust methodology that involves using historical data, near-term market signals such as POS data, changes in the weather and market conditions, to improve forecast accuracy for inventory planning. At the demand sensing stage, businesses put the groundwork in place to sense the trends in the demand, whether it is going up or down, and if it will hit the company targets. In the kitchen, the chef senses the food is simmering too high and lowers the temperature to ensure the dish is perfect.
Key elements of demand sensing include:
- Uses POS, market buzz, and other consumer facing data
- Improves demand signals available to companies, which helps to increase forecast accuracy and reduce inventory levels.
- Determines if demand generation & shaping are needed
Demand Generation and Shaping
Demand generation and shaping work hand in hand. With demand generation, businesses use targeted marketing campaigns designed to drive awareness and interest in a company’s products or services. Demand shaping follows a similar fashion. For demand shaping, B2C companies often employ price incentives, cost modifications and product push to help meet planned supply. Often, the above demand shaping tactics are not available in the B2B world. Demand shaping can be geared towards getting rid of excess inventory or to drive sales to certain products or services.
Key elements of demand generation and shaping
- Targeted marketing campaigns designed to drive awareness and interest in a company’s products or services.
- Manipulating demand for a company’s products or services to match planned supply.
- Pricing incentives, cost modifications, and product substitutions.
The Three Step Approach to Implementing Demand Generation and Shaping
Here is a detailed three-step approach to shaping and generating demand. Think of this as the “chef’s special” that combines older ingredients that are soon to spoil.
Step #1: Identify Goals
The first step in implementing or improving existing demand generation and shaping projects involves identifying business goals to ensure the initiatives match the bigger business picture. Some key questions to ask include:
- What are we trying to accomplish?
- Are demand generation & shaping opportunities available?
- What will be the impact of an action/inaction?
Step #2: Capture Data
Once you’ve identified the business goals and determined how demand shaping and generation aligns with your plan, it’s now time to determine how to use existing data to help improve demand shaping. Things to note:
- Analyze historical data and compare it to the current local situation
- Always use as much historical data as possible for a better statistical analysis
- Identify ways to create demand opportunities
Step #3: Configure Solution
At the third stage of the demand generation and shaping project, we tie everything together by configuring a solution that eliminates the need for manual data manipulation. The power in software today allows you to “see around the corner” and predict what is to come. The secret sauce is not, in fact, that much of a secret. It’s sitting on your desktop today. It’s the ability to process large amounts of data and separate “signal” from “noise”.
As with any recipe, it can be hard to know the exact right mix of ingredients to create an outstanding outcome. Be it a casserole or a demand forecast. The team at Arkieva can help you make sense of the information you have and set a strong path forward. Contact us to discuss your objectives. Our team of consultants can help.