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The State of Demand Planning 2009
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Guest Expert Insight - 2-Part Series on Warehouse Management: Part 2, A Super Warehouse Management System
Guest Expert Insight - Wright State University's Master of Science in Logistics and Supply Chain Management Delivers Direct and Relevant Business Value
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The Thanksgiving holiday shortened the trading week on Wall Street, but brought little to give thanks about amidst the fall-out of the Dubai debt revelation.  Our Supply Chain and Logistics stock index finished last week, in general, slightly down across the board.

In the software group, Manhattan fell 4.2%, followed by JDA (down 1.8%).  In the hardware group, both Intermec and Zebra were down for the week (3.4% and 0.9%, respectively).  In the transportation and logistics group, Yellow Roadway took 2 steps forward last week, but one-and-a-half steps back this week (down 8.8%). Also within the group, Prologis slipped 3.5% and CSX fell 2.5%.

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2-Part Series on Ware-house Management: Part 2, A Super Warehouse Management System

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In what year did the term "Lean Manufacturing" appear to describe the Toyota Production System concept?

Click to find the answer below
The State of Demand Planning 2009

Will 2010 be the most challenging year to forecast and plan for in history?


I have heard a lot of supply chain professionals say something along those lines to me over the past few months – and with good reason.


For example, I sat next to a VP of Supply Chain for a metals-related company at lunch one day at the CSCMP conference in Denver this fall, and he said his company was in great angst over planning, budgeting and investing for 2010. Play it highly conservative, and if the economy strongly rebounds, as some predict, you could not only lose revenue and profits, but possibly some market share on a permanent basis.


Play it too aggressive and we instead experience weak economic growth, and it could have a devastating impact on cash flow and the bottom line – and maybe send a company back towards the abyss if we see a double-dip recession.

Gilmore Says:

"Demand planners are clearly handling many times more SKUs today than they were even just a few years ago."

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It all means the job of “demand planner” has never been more important – or more challenging.


It is thus timely that we have recently released our latest Supply Chain Digest Letter, with a focus this month on Demand Planning. Many of you should have received a hard copy in the mail, but as our list shifts based on who requests each issue and other factors (and the ridiculously high costs of mailing), you can also easily download an electronic version of this excellent 16-page letter: SCDigest Letter on Demand Planning.


As usual, it was fun to put together, and we learned a lot during the research.


After all these years, Demand planning and forecasting are really still something of a mystery wrapped in an enigma.


I love this quote from Mark Lawless, a Senior Consultant for the Institute of Business Forecasting & Planning: “Forecasting has never been an easy discipline to apply and communicate. It may be one of the least understood (though most pervasive) among the business decision making tools in use by managers at all levels in the organizations.”


Tremendously important and pervasive in today’s corporations, yet still not well understood – that about sums up the state of demand planning.


Earlier this year, I had the pleasure of attending the Demand Planning council meeting at the JDA user’s conference, which includes some of its leading demand planning practitioners. There were some really smart demand planners and supply chain executives there, using highly advanced methods and approaches; yet, even within this group, there was tremendous diversity in terms of the role, pay and other attributes of demand planners within their organizations.


For some, it was basically the entry role into the supply chain, a position from which a talented person was soon to advance to some other supply chain position. At others, it was a more senior position, but one with a sort of dead-end career path. There were several other permutations.


I am paraphrasing here the comments of several of the participants at that meeting, who all said in one way or another that “The decisions of demand planner can impact the swing of millions of dollars in production and inventory, and this happens day in and day out, yet their role and place in the organization doesn’t really reflect that.”


This whole discipline has generated a lot of terms, starting with the move away from the term forecasting to “demand planning,” which, to me, implies a more holistic process than perhaps the simple term forecasting does. Indeed, it seems to me the case that companies which adopt new demand planning software usually have as their first goals just getting the process right and reducing total forecasting cycle times (which the automated workflow tools in these software solutions can really help).


More lately, we hear terms like “demand management,” “demand shaping,” and now “demand sensing.” Of course, demand planning is also now viewed as the key input into Sales and Operations Planning processes (S&OP), adding another dimension to the discipline.


I am going to be out of room here soon, and can just barely highlight some of the good stuff in this month’s Letter. Some key Demand Planning trends we identified include:


Rise of “Demand Sensing”: In short, this involves getting closer to what is happening at the actual point of consumption, and using that intelligence to adjust and make more accurate short-term forecasts. Why it took us this long to get here isn’t clear, but it is starting to happen now.


“Decomposing” Demand: Companies have been chasing the ability to effectively use so-called “causal factors” to understand the impact of different demand drivers for years, but many simply never get there or don’t do it effectively. That is starting to improve, based, in part, on better technology and understanding of how to approach this challenging effort.

Focus on Qualitative Factors: Companies that have taken statistical forecasting about as far as they can go often come to a similar realization: what is missing are better insights into qualitative factors that can be used to enhance the statistical forecast. These companies are constantly looking for insights that are not easily quantifiable or “in the data” that might impact actual demand, whether that is customer behavior, competitive activity, or other factors. But the approach can be taken too far, and actually decrease the original accuracy based on the statistical forecast.

New Category of “Super Users”: These super users are typically not responsible for day-to-day demand planning activities. Rather, they are focused on improving overall demand planning processes, looking at how the demand planning software system can be “tuned” to deliver better statistical results, and maintaining overall demand planning system parameters.

Forecasting the Hard to Forecast: The so-called “Long Tail” phenomenon has led many companies to have an increasing number of low volume, very difficult to forecast products. The general trend towards product proliferation has led to similar challenges, as demand planners are faced with a growing array of new products for which there is no history. Demand planning software vendors have developed a number of approaches to improve forecasting of these difficult-to-forecast products.

“Leaning Out” of Demand Planning Staff: Both anecdotally and from some hard research data, it is clear, despite the critical role of demand planners, that many, if not most, companies have gone even more Lean with demand planning staffing in recent years. Demand planners are clearly handling many times more SKUs today than they were even just a few years ago, in most cases. This has some interesting ramifications, among them, the need for more automation and more exception-based forecasting processes.

There is so much more in the Letter, or course, than I can summarize here. As always, we have developed a new Demand Planning resources page (newly redesigned – very good), where you find the e-version of the Letter, our best articles on the topic, some great additional white papers, video and more.

With all this, has forecast accuracy really much improved? The overall evidence is unclear on that - though, certainly, there are many individual examples of companies that have made great strides. Others appear to have slid backwards, perhaps, in part, due to the reduction in staff. Some of those are pursuing a “back to basics” approach.

I’ll end with this, a quote from Albert Einstein, which I think relates directly to the fact that forecasts are almost by definition likely to be wrong – but crucial nonetheless.

“All models are wrong,” Einstein said. “Some are useful.”


What do you see as the state of demand planning today, or any key trends? Are demand planners often undervalued based on the impact they have on corporate performance? Have we overly Leaned out staff in this area? Let us know your thoughts at the Feedback button below.

Also, don't miss our new Supply Chain Cartoon Caption contest feature nearby. A first for the industry, and should be a lot of fun for all of us.

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We received, as usual, several dozens letters from our daily video reviews of the CSCMP 2009 conference in Denver, along with our overall show wrap up (you will also find links to the videos there). Most were of the “thanks for doing this for those of us who couldn’t make it” type, and we print just a couple of those below.


We had a few more substantive reader reviews, a couple of which we print below, including our Feedback of the Week from Kevin Hampton on this topic, offering some thoughtful ideas for continuous improvement.


You will find all these below.


Feedback of the Week - On CSCMP 2009: 


The tracks were too broad, plentiful, and sessions need to go back to 60 minutes.  It was very difficult to get in more of the conference.  The Monday luncheon was so crowded that many (me included) ended up eating at the commissary on the second level. The luncheon on Tuesday, which should have been a key networking event sponsored by the CSCMP Roundtables was poorly attended.  For a logistics-focused conference, this was not only ironic, but a big disappointment.  Many of the sessions I attended had poor, outdated (no 2009 year to date data) presentation graphics (including the main speaker on Tuesday.)


I am sure there was better content across the board, but under the 90-minute platform, attending more was hard or impossible to achieve.


Based upon my random conversations with various people, I got the distinct feeling this was one of the lesser events put on by CSCMP.  Although this is only my second conference, the San Antonio Conference experience (excluding the weather factors) was far superior and the information take-away and main speakers was much better.


A few recommendations:

  • shorter and more content in a more compressed time frame;
  • shorten conference by a day;
  • allow software and/systems solutions providers to set up live demonstrations of their product; and
  • set up networking events based upon topical focus for benchmarking opportunities (refrigerated supply chains, dry freight  process industries, discrete industries, food versus machine/tooling or technical industries).

Kevin Hampton

More on CSCMP 2009:


I attended this year for the first time.


I would agree with your assessment of the presentation to kick-off the conference by Mr. Maxwell.  He was very thought provoking.


I would also agree with your point about the length of the sessions. I attended three (3) sessions each day and most were over within an hour or minutes after.  I would also like to see the lunch time reduced as I felt the almost two hours (1 hr., 45 minutes) was far too long.  I realize that networking may be done during this time but I would think that there could be some compromise with that {especially since, to my other point, many of the sessions ended well before the scheduled time}.


The highlight of the sessions I attended was “Wall Street’s View of the Supply Chain” on Wednesday. I thought the panel was excellent and there were several thought-provoking questions from the audience. The panel members were obviously experts in their fields and, at times, had differing opinions – that was a big positive for me. Helps one make better informed decisions from both a professional and personal level.


I also felt the following sessions were thought provoking and the leaders did a good job with:

  • Balancing Service w/Cash Flow- Phillipe Lambotte;
  • Pressures of the economy on Transportation Providers and affects it will have on shipper;
  • Global Infrastructure: Europe and Eastern Europe; and
  • SC Metrics used in Network Modeling: Wrigley/Mars.

John T. Paszylk

Regional CSF Manager

General Mills

I always find your articles informative........keep it up.


I did not attend the conference, but after reading your review, I regret not going.  Next year.


Ted Uhlman

Rodale, Inc.

I enjoyed your three-day summary of the Annual conference. Concise and to the point.


I didn't attend this year as Chicago as a venue wasn't high on my priority list and the scope of offerings have been slimmer the past few years.  Regarding the return to 90-minute sessions, there probably is a happy medium. When they were all 90 minutes, 6 - 8 years ago and earlier, the interesting pitches filled the time quite well and generated lots of discussion. A 60-minute session doesn't leave a lot of time for content or questions.  Seems to me that the shortened sessions (60 minutes) were also instituted to permit more networking time. 


Regarding track chair choice. My take is that those that volunteer get the job. It may be that there aren't that many willing to be track chairs. That, coupled with the need to provide topics that represent a cross section of the community, may result in limited options to the Conference organizing folks.


All above ... for what it is worth.


Again, thanks for the wrap-up sessions. I really enjoy them.


Matthew Di Fiore


Keep up the good evaluations.


Joe Teahan




In what year did the term "Lean Manufacturing" appear to describe the Toyota Production System concept?