Demand Planning & Forecasting VISEO
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Catching up with Nicolas Nesme, Supply Chain Optimisation Manager, VISEO Asia

July 19, 2018

 

Following our interview with Nicolas Nesme last year, he has been attending various events and workshops alongside his usual work schedule.

Based on his interactions with the participants, Nicolas is happy to share his findings with us:

Firstly, can you tell us more about the sharing sessions you had?

NN: The sessions were titled “Boost your inventory and service levels with forecasting best practices”. With that, I shared about demand planning and forecasting best practices, along with some examples like when to use statistical calculations, and/or collaborative forecasting.

The participants were very different: mostly manufacturers in Jakarta, retail and luxury from the French Chamber of Commerce in both Hong Kong and Singapore, and regional offices dealing with manufacturing and distribution in our office in Singapore. Since they were from different backgrounds, each session was unique to their industries and helped us to have an insightful and interactive discussion.

 

What are some of the interesting findings that you have from these sessions?

NN: The sessions showed that there are gaps between everyone’s understanding of demand planning as they all had different levels of knowledge on the topic.

Based on our interactions, I found that the participants had three main issues:

  1. There was a lack of collaboration within the organisation. The participants found it hard to collaborate within the same department and more so, across departments. Everyone tends to work in silos and have different goals/targets, making transversal collaboration especially hard.
  2. The lack of information and training led to a lapse in knowledge about demand planning. Majority did not know (or forgot) about best practices in demand planning, and some were not aware of any tools that could help them. Most of the latter only knew of Excel.
  3. Some industries, for example, manufacturing, except those larger organisations, depended on their marketing department to perform their forecasts. However, out of so many representatives from over 50 companies that attended the sessions, only one company was represented by people from marketing. They were rather helpless and did not know how to proceed with the forecasting.

Actually, I feel that the market is ready but not yet convinced. Many competitors have stopped pushing a lot on demand planning and forecasting, and some have also left Asia because of the barriers to entry. Some people neglected demand planning as statistical calculations might be difficult with the lack of knowledge and collaboration isn’t easy in some companies. So, the challenge is in how we can convince people on this, educate them about the benefits of demand planning and introduce tools that can help them achieve their targets.

 

“Effective demand planning helps to reduce costs and increase profits... This can translate to about hundreds of thousands of savings, sometimes millions.”

 

So, how can we convince companies in Asia to implement demand planning and forecasting?

NN: The main aim of forecasting and demand planning is to have the right product at the right place and right time. Inaccurate forecasts or mistakes in the demand planning process bring less sales as there are shortages, and more scraps as there are some obsolescence and more stocks. Effective demand planning helps to reduce costs and increase profits. Typically, we see that a 2 to 3% improvement in forecasts leads to a 0.5 to 1% increase in profit. This can translate to about hundreds of thousands of savings, sometimes millions.

 

Then, what do you think can be done?

NN: I believe the first thing is for people to learn and understand about the supply chain on all levels, tactical and execution. They can read up more, attend trainings, workshops, events, get certified or engage consulting firms to help them gain more insight as to what can be done.

On the other hand, one way of working on it is to start little by little. I think the PDCA model, an iterative 4-step method, is a good way for companies to start reviewing their supply chain and for them to realise that improving their forecasts can bring value to the company:

 

 

Step 1: Plan

The company can begin by assessing the current situation and check their forecasts accuracy before implementing any changes. Companies can start checking the numbers. For instance:

  • Check the inventory levels and detect items with the highest level but slow moving and how much it represents?
  • Check the items scrapped the previous year and how much it costed the company?
  • Check with operations about lost sales and how much did the company lose?
  • Check the delays in delivery and assess customers satisfaction.

After having a view of such figures, the company should set some targets and expectations for those areas/products which they wish to see improvements in. It might also be good to refer to industry standards and requirements when setting these targets.

 

Step 2: Do

Once areas of improvements are defined, the company can start working on implementing best practices, simple statistical calculations, or try to improve the collaboration working to a reduced scope for instance (it can be one key item). They can then instruct and train those involved to follow a given protocol. This can be done, for example, by selecting a certain department/product line to work according to the new set of rules, or with a new demand planning tool.

 

Step 3: Check

Monthly or maybe weekly checks should be done to monitor the results of the new changes. After a few months, do an assessment and compare the results before and after the changes were made. Acknowledge what has been done well, what was not, and which areas require improvement.

 

Step 4: Act

If goals were met, try to apply the same method for other departments/product lines. Get employees who were involved to share best practices with each other and to give feedback. Make amendments to improve, and then start the process again. Once this process has been done several times, those things that have been done well can be standardised, as you continue to monitor the other changes and fix them accordingly.

If goals were not met, they can restart the assessment to understand what didn’t work (wrong input, abnormal sales due to event, promotions, shortages which would explain a drop in the sales, …) and try to adjust for the future.

This entire PDCA process is a continuous one and should be done regularly for continuous improvement.

 

Is there anything else you would like to share?

NN: I once read an interesting article saying that in the future, the demand planner will not be in the supply chain department, but rather, be in a position that can conduct more complete and detailed analysis, make unbiased decisions and, enable more sales.

In order for this to happen, I think there should be strong buy-in from the top management to support the inter-department collaboration internally. Marketing, sales, planner and production should work together and be taught the relevant skills to be involved in the demand planning process. Then, the demand planner, marketing or production planner will be able to analyse data with different inputs from the various departments and incorporate them into the forecasts.

With strong support from the top management, and everyone having knowledge of demand planning and collaborating together to achieve the same goals, we would be able to see some huge improvements.

 

For more information about our supply chain offerings, please visit here.

If you wish to attend our future supply chain events or to schedule a meeting with us in Asia Pacific, please contact us at marketing-apac@viseo.com