I saw a posting in IT Toolbox, SCM Vendor selection http://supplychain.ittoolbox.com/groups/vendor-selection/scm-select/re-how-to-select-the-right-demand-planning-software-solution-3290900 which is asking for advice in selecting a demand management tool for a business with "lumpy" demand.
The question got me thinking about how to answer the posting...
The answer to the question depends on what you are looking for. I agree that you would likely benefit from taking a step back to understand why your demand is so lumpy and whether aggregation of demand would take out some of the bumps.
I presume you are asking to find the best system for producing a forecast from your historical demand. Such a system might be called a statistical forecasting package.
On the other hand, you might be looking for a system to help you:
· Capture various inputs, such as sales projections, marketing projections, management judgement, and possibly a statistical forecast, to develop a single collaborative forecast,
· Detect changes between the actual demand and your forecast,
· Change your supply plans in response to those changes, and
· Revise your forecast when appropriate.
You might also be looking for a system to help you:
· Determine target inventory levels and resulting replenishment plans in order to handle the “lumpy” demand you mentioned,
· Detect when your inventory at various locations is in excess of current needs, especially if there is a shortage in that part in another location, and
· Link replenishment to satisfy demand with your supply side planning to determine viability and to simulate potential changes.
Next, when your supply simply can’t satisfy the demand fast enough, you might want a system to help you allocate the supply to particular orders or distribution channels, possibly based on a combination of fair share, equal share, and priority schemes.
That leaves just one more question: What types of users do you expect, what actions and decisions do you expect them to take, and how do you expect people to interact with your new demand management system?
You might find that what you thought you wanted would only cover some of the total demand management picture.
So, what do you think? What constitutes a demand management solution?