demand dimensions, valtitude, demand planning net

As we observed in other posts on Linked-In and forums such as Medium, there is a lot of confusion on what Demand Consensus means.

Some first principles:

  • Demand Consensus is not matching Demand with Supply; in fact trying to match Demand to supply is counter to everything S&OP stands for
  • Demand Consensus is not agreeing with the Supply Planner
  • The output of the Demand Consensus process is just one thing namely to arrive at Consensus Unconstrained Forecast

To arrive at a consensus demand plan, we need to do triangulate across multiple demand dimensions:

  • Marketing inputs (medium to long-term where you can shape demand)
  • Sales Inputs (for those that think intelligence and Sales don’t go together)
  • Financial Plan that has been agreed upon by senior management
  • Stat Forecast that is purely an unbiased estimate of pattern-based forecast

Sales Forecasts generally cover the immediate term that throws light on true customer needs arising from customer and market events, slated promotions and competitive events. Marketing inputs throw light on advertising and product development that strengthen the franchise and generated longer term demand. As you can see, supply planner input is neither required nor necessary.

And we may have to compare the forecasts with some stability measures such as Year ago historical and the Consensus Forecast from Last cycle.

Only when you compare forecasts from multiple demand dimensions and across the reality of where we were last year and last month, the truth about the current demand statement can be known.

True Demand consensus process will be enhanced by commentary generated by the Demand Planner to address various differences such as Gap to Financial Plan, Growth versus last year, Delta to Stat forecast and how the forecast changed from our previous demand statement.

Click here to know more about the key planning methodologies.