Transcript
Intro: You鈥檙e listening to Supply Chain @ 乐鱼（Leyu）体育官网, a 乐鱼（Leyu）体育官网 podcast series that addresses your supply chain needs from strategy through execution.
Mary Rollman: Welcome to the 乐鱼（Leyu）体育官网 supply chain podcast. My name is Mary Rollman, and I lead supply chain at 乐鱼（Leyu）体育官网. Our topic today is centered around demand planning, a traditional process that's been around for decades and has been evolving greatly. With me today we have three leaders from the 乐鱼（Leyu）体育官网 Supply Chain practice: Neeraj Verma, John Witt and Brian Gimuriman. Neeraj, do you want to start us off by introducing yourself?
Neeraj Verma: Yes, thank you Mary. Neeraj Verma, I lead supply chain planning practice within 乐鱼（Leyu）体育官网. Glad to be here, John, do you want to introduce?
John Witt: Thank you, Neeraj. I'm John Witt. I'm director of supply chain planning at 乐鱼（Leyu）体育官网 leading our demand planning capability. Great to be here today and now I'll pass it over to Brian.
Brian Gimuriman: Thank you, John, and last, but not least, my name is Brian Gimuriman. I'm a manager from our supply chain planning practice, and one of our demand planning capability leaders. Super excited to be here with all of you today to talk about the great things in demand planning.
Mary Rollman: Awesome. Thanks Brian and thank you all for the introductions. It sounds like we've got a pretty good lineup to talk about supply chain planning. So, first Neeraj, if you don't mind, I'm gonna circle back to you. How does 乐鱼（Leyu）体育官网 think of demand management conceptually? If done correctly, what value can demand management actually provide to an organization?
Neeraj Verma: Mary, you bring up a very good point. Right? And, interestingly enough, right, we are no longer calling it demand planning. We're calling it as demand management, because demand planning is just one of the essence or a component of demand management. It's a process to cross functionally align on the view of what a company or an organization think that they will actually sell in the market, ignoring all the constraints like labor capacity, supply. The first step for the organization is in a properly functioning S&OP or IBP process is to get the demand piece correct. So, the process includes three high level steps in my understanding, in my opinion, demand analysis, demand review, and then finally reaching to a consensus demand planning. The key or the most critical viewpoint here is that this demand picture that you're going to get out of this process is an unconstrained view of the demand. What and you also touch base like this process has been there for decades, and it has. We have seen it ever evolving. You have sales and marketing input. You have your promotions; you have your pricing. How do we bring all of these together in a cohesive view where organization can align and say yeah, this is the demand that we are moving forward with. Once you do that, the value is tremendous, because the out of this process pretty much feeds everything that you do in planning. It not only just feeds supply planning, but also helps you understand as an organization, as hey, if I'm able to do everything right, this is the true potential of our products in the market. What should I be making? But also, the finance should also understand what's the potential revenue on the table. So, demand planning, demand management brings a pretty interesting and cohesive view not just for the planning organizations or supply chain organizations, but also to your CFO, COO, CEO. And strengthening this accurately, making proactive decisions at the leadership level, understanding true demand strengthens predictability, readiness, and your supply chain resilience.
Mary Rollman: So that all sounds fantastic. It sounds like demand management has a real place in an organization to drive critical business process around understanding true demand. So, I'm gonna flip this over to you, Brian. What are some challenges that organizations are encountering from a demand planning perspective? Why is that? Are there still hurdles to this process?
Brian Gimuriman: Thanks, Mary, that's a great question. Now on paper the process might sound easy. As Neeraj mentioned, we are essentially trying to understand how much volume we expect to sell for a given period. However, what might sound easy on paper oftentimes is far from it. In fact, there are a lot of challenges organizations across industries face to complete the process successfully and accurately. Let's focus on a few of the most common ones we've seen recently. For starters, do you know what your external factors are that drive your business? Creating an accurate forecast is becoming more challenging due to the increasing number of factors teams need to consider. Think of things like weather for seasonal products or global car sales if you make car tires. Next, are you experiencing constant shifts in demand which are misaligned with historical performance. This is an increasingly common challenge we're seeing as consumer preferences have changed rapidly over the last few years, driven by both social and economic factors resulting in less predictability based on past trends. Additionally, are your cross functional teams adding bias to their projections? Are there competing priorities causing misaligned forecasts? These two are connected because many organizations struggle to provide clearly aligned priorities, including who actually is accountable for forecast accuracy? This has a negative impact to the forecast value add over time. Lastly, are your legacy techniques resulting in diminishing accuracy performance. This is one that we hear about a lot, especially as many of the traditional history-based techniques are no longer as effective in driving continuous forecast accuracy improvement into the future.
Mary Rollman: All right. Well, I'm gonna keep you on the spot for just a moment. You mentioned a lot of the challenges, but I'm guessing for every one of those problems that were mentioned. There's some solution that that can be addressed. How can companies actually address these challenges? And not only how could they have done it 5, 6 years ago? Are there any new ways to think about dealing with these challenges around demand management?
Brian Gimuriman: I'm really glad you asked that, Mary. So, when I think about demand management, if we think about it at the 50,000 foot view, it centers holistically around three main pillars; people, process and technology. Now, a common misconception we continue to hear from leaders is that if you ignore the people and process part and focus only on the technology aspect, you will immediately solve all of your demand planning and demand management challenges. Part of this is driven by, as Stephanie David mentioned in a prior episode of the podcast, the shiny object syndrome where there is a rush from leaders to rely exclusively on advanced technologies to solve these challenges. However, based on our experience, focusing on technology first and only introduces significant risk and prevents sustainable forecast accuracy improvement because it doesn't actually address the challenges at heart. Instead, organizations need to focus on the people and process components first as they are the critical foundational elements for any level of sustained success. To put it more simply, without the right level of cross-functional collaboration, understanding of your forecast inputs and alignment on the forecast assumptions used any technology related benefit will be limited. This level of collaboration goes beyond just the demand planning function and must include functions such as sales, product management, marketing, and even your customers. However, once those two foundational pillars are solidified, then we can introduce the third area of advanced technology. Now, from our view, this next generation of demand management technology centers around a more intelligent use of AI and machine learning techniques to improve visibility, agility and accuracy across the supply chain and goes beyond simply using a software to perform all of your demand planning and demand management activities. At 乐鱼（Leyu）体育官网 we call this next generation approach cognitive demand planning.
Mary Rollman: All right so that's a big word. That means I'm going to have to ask for an explanation around cognitive demand planning. I'd really love to understand how it鈥檚 different than traditional demand planning and how are companies actually benefiting from the use of this more advanced technique. John, why don't I ask you to answer that question?
John Witt: Sure, those are great questions Mary. First to provide some context on what cognitive demand planning is. It's an approach that leverages, advanced analytics and predictive forward looking techniques to better match your demand with your supply, and also allow companies to make more quick decisions with their full network of stakeholders, both internal and external, including things such as customers, suppliers, etc. Also, cognitive demand planning leverages overall market data. Things such as economic performance, major geopolitical events, or even those weather patterns that Brian referenced earlier to proactively identify and predict the resulting impact on demand. So how is this different from to traditional techniques? Well, traditional techniques often are historic based and backward looking. And they're based on fixed models that are set in place no matter what happens going forward. However cognitive demand planning focuses on having adaptive and predictive models that allow things to be forward looking and to continuously learn and evolve. Powered by AI and ML technology they have a continuing feedback loop to train, test, and learn to go forward and to take what has happened and what the model has observed in past performance to improve future results. Cognitive demand planning is very forward looking, and this is much different from traditional demand planning back models that mostly looked in the past and into historical results.
Mary Rollman: Historical data, I was a demand planner. That's what we use to predict the future all the time. So, I'm gonna have to ask you if you could go a little bit further, and maybe share an example of where this has actually been used, and what the client learned by working with cognitive planning.
John Witt: Certainly, Mary. Now, when we talk about success stories, we especially love those ones where we could take a client through the entire end to end transformation journey. We had one such example recently with a large retail client. So, this client, who is one of America's fastest growing retailers, we were able to take them from having little process, no demand planning team and rudimentary technology to a robust demand planning function with a disciplined process, a strong team and a best-in-class demand planning technology solution implemented through that cognitive planning approach we just we just discussed. This was able to yield our clients significant efficiencies and effectiveness by reducing operating cost, increasing inventory turns, improving fulfillment rates and improving asset utilization. And most remarkably we did this full transformation in just one year, it was quite a journey. There was many lessons learned from it and I think the first one to center back on what Brian was spoken, speaking about previously was that process driven, people centered and technology enabled work best. So initially this client, like many as Brian had mentioned earlier, fell for that shiny object syndrome. They simply tried to just implement advanced planning technology and thought that was going to solve all of their demand management issues. However, they then corrected course. They brought 乐鱼（Leyu）体育官网 in and we worked with them to establish a structured process and onboard and train a team to execute that process so they could be ready to execute the cognitive demand planning approach and fully utilize the advanced planning system. So, I want to really focus on that team aspect because it is critical. To be successful in implementing cognitive demand planning you must have a team that's ready and able to execute the advanced techniques. You can do this one of two ways, you can either upscale your current team and or you can hire outside skill sets to bring in new talent to the organization. For this client, they both cross trained some of their existing team members from other supply chain functions to be demand planners, and they also hired some outside talent with more advanced demand planning backgrounds. So, in this retailer success story having this, having this team in place and a disciplined process, allowed them to fully utilize and reap those significant awards of that cognitive demanding planning approach. We're very proud of this client success story and this client is doing extremely well with their new cognitive demand planning driven approach.
Mary Rollman: Yeah, I bet they are celebrating. That's a huge thing for them to do. But I'm guessing it's not as easy as you might have just made it sound in to implement cognitive demand planning. It sounds like there's a lot of work that goes into creating a better skilled demand planning organization enabling an organization. But Neeraj, I'm gonna put this one back on you. If it's an easy thing to implement, why are companies not actually doing it?
Neeraj Verma: That's a great question, Mary, because all organizations end of the day want to optimize or improve their supply chain. That's a that's a major trend that we are seeing from in our surveys everywhere. That supply chain is in the top three priority list for all executives. Said that, like what John said and what Brian said, even Stephanie in in her previous one of our podcasts spoke about is that shiny object syndrome. And the companies literally go straight into hey, let's hire some data scientists. Let's figure out which algorithms will work. And let's see what the output is. And this whole trial and error method leads them into frustration. That, hey my business is unique, I'm not able to get the results what I want. So, with any business transformation, implementing a cognitive demand planning is a journey that the leaders have to really understand. They have to sponsor it and support for driving the change, putting the right people, right processes and then going after the technology which is the most suited technology for their organization. So said that we believe that the right support and commitment, the benefits of cognitive event planning can be achieved across all industries. Like what John pointed out right, having a great demand plan and having a great process to manage your demand or demand management enables companies to reduce their operating expenses, since the data is used downstream in all supply planning functions, whether it's a buy plan or whether it's a manufacturing plan having that accuracy, having that strong demand picture allows all downstream processes to work correctly. So, with our market proven approach of collaboratively delivering these successful engagements what we have learned is it's not a question of whether it's easy or difficult. It's a question of, do we have the right sponsorship at the leadership level? Does the leaders understand that it's not a switch that once you turn on, the results will start pouring in. It's a process. It's a journey. And to get the results that the leaders are looking for all these advanced techniques that John was talking about, AI, ML, they have to be trained. And when they are trained on a historical data, and as we move forward looking into demand planning, these models have to be retrained, have to be back tested and retrained. So, it's it's a journey. It's an evolution where people process and technology, all three have to come together, and it needs a super high level of sponsorship and commitment from the leaders to get this thing right.
Mary Rollman: Excellent. Well, I can say, as a former demand planner and forecaster, I love seeing that this space continues to evolve, and it sounds like cognitive demand planning is really becoming a reality for many organizations. I want to thank you, Neeraj, John and Brian, for your time. As the next generation of demand planning continues to evolve, and our supply chain leaders have an exciting opportunity to improve their end-to-end visibility and agility. So once again, thank you to 乐鱼（Leyu）体育官网 leaders who joined me and thank you to our listeners for taking the time to listen to what we have to say. As always, for more information about this topic or any other topic in supply chain you can always check us out at 乐鱼（Leyu）体育官网/supply chain, and that鈥檚 all we have for you today.
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