In ancient Roman religion and myth, the god of beginnings, gates, transitions, time, duality, doorways, passages, and endings was Janus. Janus symbolized change and transitions such as the progress of past to future, from one condition to another, and from one vision to another. He represented time, simultaneously looking into the past with one face and the future with the other.
Why the lesson into Roman myths; demand planning performs a critical pivot regarding the connectivity and integration between the forward-looking commercial outlook of an enterprise and short term, detailed supply/production planning. Positioned at the 3-month horizon (nominative cumulative lead-time) the demand plan looks forward over the 36-month horizon illustrating the commercial trajectory of the enterprise, while, simultaneously, looking into the 0 to 3-month execution horizon and past performance to evaluate events governing the present.
Many enterprises use the term demand planning synonymously to describe both qualities; frequently we hear Finance describing the demand plan as being the commercial plan while supply point to inaccuracies in the commercial plan as the single cause of service issues. Arriving at a singular definition of each aspect of demand planning, and the connectivity to demand management is a significant milestone in ensuring an integrated dialogue.
Unfortunately, the challenges do not stop at a common terminology! In most enterprises, the voice of Finance drives the standard hierarchy of planning, directly connected to the P&L, balance sheet, and annual 10-K financial report. Not surprisingly the demand planning function is ‘strongly influenced’ to adopt the same planning hierarchy, perfect for the commercial projection however not so good for the supply plan, driven from an aggregated, dollarized ‘demand’ plan.
Combine this discussion with the complexity of a system of record which, predominately, relies on a statistically generated demand plan, calculated from SKU historical consumption (attachment rates), the dilemma of aligning and integrating the commercial plan, demand plan, and supply plan become complex.
Integrated business planning espouses ‘one set of numbers’ however, within the context of complex, global networks and demand dependencies a more realistic objective is a credible ‘suite of numbers’ which enables fundamental diagnostics and course correction to drive the business objectives. Systemically bias commercial performance brings doubt to the long term commercial performance, while systemic bias in the ‘base-unit-of-measure’ demand plan differentiates between demand and supply improvement opportunities.
The context of a discussion at the Management Business Review is therefore governed via ‘5-whys’ diagnosing three data sets; historical commercial performance vs financial forecast, the historical base unit of measure (BUoM) demand plan performance vs BUoM forecast and supply performance. The consequent diagnostics facilitate continual course correction, firing the appropriate thrusters to keep the rocket pointing roughly in the right direction.
I contend, the fast-paced, dynamic environment of a global, fast-moving consumer goods (FMCG) organization, challenges every aspect of demand, supply, and commercial planning synchronization. Integrated business planning must be designed and implemented in a manner that drives the intent and purpose but avoids getting bogged down and derailed in the intricacies and complexities of detailed planning. As long as the rocket is pointing roughly in the right direction and the destination is more-or-less ahead of us, IBP can claim victory.
