I interviewed Gautam Sukumar who discussed Demand Planning.
It's nice to speak to you today, Gautam, and looking forward today to hearing your views on demand planning. Before we start, can you provide a brief background of yourself?
Hey, Dustin. I work in the supply chain. I've been working as a supply chain consultant for the last five years. I've worked with now multiple industries and consumer package codes. Currently I'm working for a client. I've also worked for a life sciences client in the past. I've done my MBA in supply chain management and been in this field for the last five years.
Can you discuss a little bit about what is demand planning?
Put in laymen terms, demand planning is nothing but trying to understand what is the demand for the product. To understand the demand for a product, it's not going to be as simple as just look at past-month sales or past-year sales. You need to factor in multiple trend scenarios as well. For example, there could be a multiple external factors affecting the demand for your product. One is season. Two, if the company is running some kind of promotion, activity. Three, it's also the brand image and the competitive market.
So all these factors put together dictate the demand for the product at the end of the day. And the demand plan is something that dictates the production of your product so that this acts as the input for your sub planning.
So a lot of are dependent on your demand plan, and your demand plan, as I said earlier, it based on multiple factors.
Can you talk about the importance of demand planning?
Demand planning dictates multiple things for a company. For example, you need to have your demand plan in alignment with your financial plan. You can have a financial plan of, let's say, to make $20 million dollars in Q1, Q2, Q3. But if your demand plan does not match up to it, you're not going to be making those sufficient products. If you're not going to be making sufficient products, then you're going to end up with.
The other scenario could be where the financial plan is only to sell $20 million worth of product, but you're manufacturing $30 million worth of product. Then you're left with inventory of $10 million. So it's very important to have a demand plan that's in aligned with your financial and the sales plan. In that respect, a demand plan dictates the direction of the company.
Can you share with us how this is done effectively?
The most effective way to have your demand plan is when the companies have a very robust S&OP process implemented. So it's very important to have your sales and operations plan. That's when your is going to act as central to this S&OP plan and you can drive your S&OP process using the demand plan that you've come up with. So it's very important to have a very robust S&OP process which will bring in a lot of things into place. So S&OP, I think, is a very important aspect to get your demand plan in accordance so that you get alignment with your sales team, financial team, the operations team.That's the most effective way to have a very robust plan.
Do you have any final recommendations regarding demand planning?
In terms of recommendation, I would say try to understand what the product is behaving according to the situation. For example, we need to... market situation.We need to have a very... Sometimes it's just not about numbers. You need to be very involved with the product. For example, I've done demand planning for a nail polish company. So even though nail polish plan, I tried to be very involved with the plan so that I understand what's happening, how the market reacts to different things, and what is more widely accepted, versus some colors which are not accepted. So it's very important to be very closely associated with the plan and the product when you're doing demand planning.
About Gautam Sukumar
ERP & Supply Chain Professional