How good is your Crystal Ball  … Or are you getting the right signals from your Demand Management?

How good is your Crystal Ball … Or are you getting the right signals from your Demand Management?

Article by Jens Schmeer, SAP SCM Solution Architect.


Demand Planning as it was once known has come a long way.

For one its name. Today we say Demand Management. Sure, traditional Demand Planning is still at its core. The aim is to accurately forecast the demands for a product or service as the main signal for the supply chain to ensure it can be produced and delivered in time to satisfy customer demands.

But there is so much more … Demand Planning also needs to feed into the S&OP process to support far reaching tactical and strategic decisions. Do we have enough capacity in our supply chain for the next 2 years to support our growth? Do we need a new plant or contract with more suppliers?

To stage your products, materials and services at the right points in your supply chain network and to determine optimal inventory levels, forecast is the crucial input. And not just any number. In order to truly benefit some tools like Inventory Optimization in SAP Integrated Business Planning (IBP) you need to ensure that you feed it the best possible forecast with the highest possible accuracy. Also, reducing the variability in your forecast will reduce safety stock in the network, thus providing a significant reduction in inventory carrying costs.

Even one of the more recent supply chain planning methodologies, DDMRP (Demand Driven MRP), does need at one point in its process a good, reliable demand plan (forecast).

I am sure you also can add plenty of examples to that list. They all show that forecasting has grown into Demand Management with its own planning methodologies, processes and capabilities that go beyond the classical Demand Planning processes.

At the same time, like all other parts of an organization, Demand Management is also undergoing digital transformation.

A few organizations that were early adopters are close or have completed already their transformation from supply driven to demand driven organizations and started looking into how to become value driven. By now, however, all have begun their transformation journeys.

And all organization face 2 common challenges:

  1. Change

With higher customer expectations on quality and availability of your products and services, as well as higher volatile markets, we see that you lack one thing: Time.

In the past you knew that your processes took long, but since it was a supply driven world, it mattered less. In today’s demand driven world, time matters. It matters to make better decisions. It matters to work more collaboratively and have shorter decision cycles. It matters to be able to run as many “what-if” scenarios as possible.

Certainly, the challenges and opportunities that each organization are facing vary vastly. What is required to master today’s business requirements is the same: The need for change!

You started your journey: You are transforming your organization and processes to the requirements of your customers or today’s markets. Sometimes we even get to be part of your journeys and this is probably as good a place as any to thank you for allowing us to do so!

  1. Volumes

Mastering the challenges of transforming your whole organization and processes is just one part of the story. Together with all the market changes and the digital revolution comes the fact that today you have access to more information than ever before. Will it help you to make better decisions? Yes … And you want to take advantage of every bit of information… And that is when you ask yourself “how do I handle these huge volumes of information?”

Right, you need a tool that has proven to handle all kinds of data you throw at it and can be easily adopted to support your organization and planning processes.

From a Demand Management perspective, the question is not just can you adjust to change and data volumes? The question is also can you still afford to look at all planning data and be sure you have the most accurate forecast? Or as I asked at the beginning of this article:

So how good is your crystal ball?

Are you getting the right signals from Demand Management?

Yes, there will always those ‘A’ products that you want and need to look after. Sure. But what about the ‘B’ and ‘C’ products?

And what about the correlations between prices or temperatures or work/weekend days per week and their impact on your sales? What about artificial intelligence forecasting techniques? What about Forecast Automation?

Are you starting to wonder how good are the processes and tools you use today compared to the forecasting tools that SAP Integrated Business Planning has to offer?

We have been facing those questions from many of our customers.

That is why we developed a service that will provide answers  to those questions called: demandlogix is a proof of concept that will allow you, based on your actual data, to see the quality of the statistical forecast models and processes that come with SAP Integrated Business Planning (IBP). We also compare your forecasts with those produced by IBP and summarize it all in a comprehensive report.

Taking advantage of statistical forecasting, however, will allow you to save time in your day to day operations that you need to focus on making the changes to your organizations, to make right business decisions and analyze different what-if scenarios.

Secondly, SAP Integrated Business Planning (IBP) is proven to handle the volumes of data you need to process and can be easily adopted to support your organization and planning processes.

demandlogix reduces your risk, as it will the prove your decision to embark on your journey with SAP Integrated Business Planning is the correct one – before you commit!

Lastly, it provides you with real benchmarks that can feed directly into your business case and KPI’s, helping you to measure your success.

Interested? What to know more?

Contact us to find out more at : 

Are you also looking into fixing your inventory mix and reducing the cost of your working capital?

Have a look at inventorylogix.