According to Michigan State University, “demand planning is a supply chain management process of forecasting, or predicting, the demand for products to ensure they can be delivered and satisfy customers. The goal is to strike a balance between having sufficient inventory levels to meet customer needs without having a surplus.”
When deciding to strengthen your supply chain infrastructure, the question of roles and responsibilities of demand planning arises. Should demand planning be placed under supply chain management, sales, or finance?
Demand planning is a bridging function between commerce and supply chain. Thus the question of roles and responsibilities of demand planning isn’t a surprising one.
In order to ensure success, there should be a clear distinction between the demand plan; the projected future volumes and revenue; and the demand planning cycle – the steps that will get you to the demand plan.
Roles of Demand Planners
Demand planners facilitate the process of getting to the demand plan by generating insights from different sources of data and input from different stakeholders. They can keep a critical mindset and challenge assumptions. They should own the process but not the actual numbers.
Sales and Commercial Managers’ Responsibilities
Sales / commercial managers should validate the demand plan during a demand review meeting within the sales operations and integrated business planning (IBP) cycle. They’re responsible for the final number that will serve as a base point for relevant supply response.
Finance’s Role
Finance should have an understanding of the demand plan. So the labor costs and cash flow management can be kept under control. They need insight into cash flow so that the business doesn’t get into situations where funds are tight. Or worst of all, when vendors and suppliers can’t be paid.
Supply Planners’ Responsibilities
Supply planners are responsible for monitoring and managing the inventories and should work with the demand planner for forecasting sales and production level plans for materials needed. They track the delivery performance and response time, handle capacity planning and various logistics so they need to have a hand in the demand plan.
Benefits of Collaborative Demand Planning
By having these different roles keeping an eye on the demand plan, you take the risk out of daily operating decisions. You also have different departments and divisions working together with a common goal. Demand planning keeps your supply chain running smoothly and gives your business the opportunity to achieve more.
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