The major challenge in designing an effective Demand Management process is incorporating promotional lift and volume information into the forecast. The first challenge is to lay the correct information channel between field sales into the forecasting group so every change to the promotional plan is captured immediately. In most cases, this can be thought of a 50% win in process design.
In practice, the following challenges are very common in the promotional planning process for a typical manufacturer:
CPFR and Collaborative-ABF have attempted to address the issue of promotional planning. It is important design the collaborative meetings to start with a discussion of major changes in promotional events compared to what was used in the forecast in the previous period. Once both parties are in the same page about the promotional grid, then attention should be paid to agreeing on the correct lift for the promotional events.
Assuming there is technology in place for Customer Relationship Management, here is one model of information flow in the collaboration process for promotional planning:
Key process driver is the information-sharing between the customer, and sales teams with the demand planning group. It is a big process win if event changes are communicated rapidly upto the manufacturer's supply chain. In the above model, the CRM process contains all key data about promotions and lifts. The collaboration process verifies the accuracy of this information, incorporates late breaking events and achieves consensus on the lift identified with the promotional plan.
In designing this process, care should be taken to build a correct and consistent baseline so promotional lift volume is truly incremental to the business. Secondly, application of exception management is key as there will be so many run-of-the-mill promotions with little or no true volume effect. Hence, proper thresholds should be established to focus the process on key promotions and retail events.
If you would like to find out more details on facilitating or developing an effective promotional planning process, please contact us.
©2004-2017 by Demand Planning, LLC. All rights reserved. Privacy
policy | Refund and Exchange policy
| Terms of Service | FAQ
Demand Planning, LLC is based in Boston, MA | Phone: (781) 995-0685 | Email us!
Demand Planning | S&OP | Retail Forecasting | Supply Chain Analysis: » Value Chain Metrics » Inventory Optimization | Supply Chain Collaboration