Introduction
The increasing complexities of global supply chain networks have made demand planning more relevant, especially with unpredictability due to changes in market volatilities. Demand planning and subsequent budgets could be potential areas where increased focus may be happening, more so for businesses that are “staying in the middle” and trying to keep an edge in their “competitiveness” of profitability. The paper “Best Practice Demand Planning Meets Unprecedented Demand Volatility,” by John Kamal (2013), underscores that it is mandatory for best practices to be adopted, with demand planning not swept off its feet by the tides of change and uncertainty. This paper focuses on two such practices—collaboration and structured workflow in detail—and discusses two decisive practices that are important for making an organization profitable.
Collaboration: The Keystone of Demand Planning
Collaboration in demand planning is a synthesis of different departments of an organization, from sales and customer service to production planning, and so many more. It further extends the organizational horizon to include customers in communicating production and scheduling with consumption forecasts by an ideally electronic method for easier assimilation and interpretation (Kamal, 2013).
Impact on Profitability: The collaborative approach brings more than many perspectives; it brings the competing versus the complementing into one holistic, coherent vision of demand. Such multifaceted information allows an organization to fine-tune production and inventory management to near-real-time to correspond more accurately with demand, thus reducing overproduction and wasted resources. This can be mitigated, for example, since the predictions of demand can now be combined with real-time customer data, which can lead to painful but very costly outcomes of out-of-stock or excess (Kamal, 2013). As forecast accuracy based on collaboration improves, inventory levels can drop by as much as 34 percent with much better forecast accuracy, according to some research work conducted by Triple Point Technology (Kamal, 2013). A small amount of inventory would mean low carrying costs and leave some capital free with the company for reinvesting into the company for growth and innovation.
Structured Workflow: The Blueprint for Accuracy
The second practice of structured workflow calls for having a systematic way of doing demand planning, not having it hostage with ad-hoc updates that do not have much value. The call for focusing on a three-month rolling tactical forecast is driven by balancing the associated issues with long-horizon forecasting and the need to plan long lead time items (Kamal, 2013).
Impact on Profitability: Companies can plan their production schedules and resource allocation more efficiently by adopting a structured workflow. This intensely improves the quantity of work done by up to 80% compared to manual tracking and scheduling. Structuring the workflow helps companies better plan their production schedules and other resource allocations. This proactive stance thus eliminates the need to rush into last-minute changes, which more often than not result in high costs from rush orders, expedited shipments, and overtime pay, among other things (Kamal, 2013). An adequately defined process also clarifies roles and responsibilities; the propensity for errors and redundancies that are otherwise financial drains is minimized. These structured workflows also support a stable production flow, given that these efficiencies are part and parcel of bettering the bottom line, in that they optimally maximize productivity and stabilize production costs, as fluctuation that brings the economy down is removed.
Conclusion
The turbulence of demand volatility is nothing short of a challenge to demand planning, which, out of best practice, can turn the same into a strategic advantage. Structured workflow and collaboration will allow businesses to tide over market turbulence and make profits. It becomes easier to model best practices in the supply chain, besides also allowing firms to cut costs, maximize efficiency, and lay the groundwork for sustainable financial success. However, a change to adaptation in global demand dynamics will not be more of a transient change; rather, a fundamental change will be an operational paradigm. The organizations that would practice such best practices would not only be able to recover from the wild volatility but also re-modify the benchmarks of excellence within supply chain management, ultimately showing its benefit in terms of profitability and long presence in the market.
Reference
Kamal, J. (2013). Best practice demand planning meets unprecedented demand volatility. SDCExec.Com. Retrieved from https://search-proquest-com.proxy.indianatech.edu/docview/1465446929?accountid=42681
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