Embracing Holistic Demand Planning

Data is making our world smaller. It has never been easier for organisations to reach out to new markets, using technology to enhance their operations. Analytics programmes sieve out data from every segment of the business to illustrate key trends and insights.

Demand planning and forecasting can leverage this abundance of information to chart a healthy, sustainable business growth trajectory. Many B2C companies look to the past to predict the future by examining historical trends and KPIs from a structured enterprise data warehouse containing records on the consumer level.

However, as our world becomes increasingly interconnected, it is no longer possible to rely solely on historical trend analysis. Forward-thinking agencies are looking around themselves, taking external demand trends like consumers’ income levels, demographic makeup, industry happenings and complicated trends into account. Moreover, competition also influences pricing, selection, and service investments.

A more holistic approach to demand planning, including macroeconomics and historical as well as competitive trends will help you better predict your future performance. Data-driven clarity will light the way forward.

A Three-Pronged Approach

You can’t act on what you don’t know. When forecasting demand, your business should have a mechanism to understand external demand variables. One practical way to do this is by setting up teams to examine how these variables impact demand for your business.

One team could specialise in using historical data and applying trend prediction methods across the board, leveraging deep analytical models to anticipate future trends. They should be backed up by a team of research analysts, seeking to examine macroeconomic trends and how they interact with your industry and your business. With their wide and deep understanding of market interactions, economic analysts can provide new, refreshing insights from an outside-in perspective.

Dedicate a third team to assess your competition: from their services, pricing strategy and investments down to tracking competitors’ online presence and popularity by analysing their site & visitor metrics.

As Sun Tzu wrote in The Art of War, ‘If you know the enemy and know yourself, you need not fear the result of a hundred battles’. Working in unison, this holistic demand planning team will help you devise well-informed estimations and growth strategies.

Capacity in Demand Planning

Supply and demand are inseparable; any demand forecast must take supply, and therefore capacity, into account. Demand planning is compartmentalising capacity across the board.

Here are some of the supply side factors to consider.

1. Selection Capacity

At the start of your supply chain is the issue of selection capacity. This refers to issues like how much product you have, the product selection available to you and how diverse it is.

2. Tech Capacity

Down the chain, tech capacity comes into play. How much load can your systems support when your products hit the market? Are your systems scalable enough to handle the demand? Questions like these should be carefully considered for effective market outreach.

3. Service Capacity

If selection capacity is about what you have, and tech capacity addresses your system limitations, then service capacity speaks to something more fundamental: how are you going to do it?

Using e-commerce as an example - the supply chain defines service capacity. Do you have enough people on the ground to make the deliveries happen? This capacity becomes critical when you need to have something delivered on a short turnaround time. While manpower issues can create headaches for e-commerce companies, it is a better scenario than not having any business at all. It is easy to sink into irrelevance amidst intense competition in the rapidly growing e-commerce industry.

4. Pricing Capacity

You would then have to think about how much you can invest in discounts for your products. That is, looking at demand curves to figure out at what price you’ll be able to sell a certain quantity of goods.