Customer Demand Planning

Customer Demand Planning (CDP) is a business-planning process that enables sales teams to develop demand forecasts as input to service-planning processes, production, inventory planning and revenue planning.[1]

Definition

CDP is an important aspect of managing value chains. Generally, the first step of CDP is to forecast product demand. A manager can plan resource deployment in accordance with the resulting forecasts. It's a bottom-up approach vs. top down planning. Associated risks with this method are: Low forecast accuracy and numbers of planners required. There are various software systems created by companies such as Dynasys, Avercast, Demand Solutions, RightChain TM, SAS System, Agentrics, Manugistics, Oracle, Petrolsoft Corporation (now Aspen Technology), StatSoft, ToolsGroup and GMDH Shell that are designed to forecast demand and plan operations. To test the added value of implementing bottom-up approach, SAP APO applications are providing simulations functionalities to estimate the resulting Demand Forecast Accuracy (e.g. POS sales ; Sales invoices ; shipments, etc.)

In the manufacturer to retailer model, customer collaborative partnerships have been become more common since the 1990s. Although there was a lot of industry support behind CPFR (Collaborative Planning, Forecasting and Replenishment), manufacturers and retailers are adopting different versions of collaborative forecasting and replenishment strategies. These include Collaborative-VMI, CPFR, Account Based Forecasting, CMI, Shared Single Forecast and replenishment etc.

Discovering markets

The challenges and complexities faced by the retailer are somewhat different from the challenges faced by suppliers (manufacturers and distributors). Therefore, the demand management technology for the merchant is somewhat different from that of the brand or manufacturer on the supply-side. Customer Demand Planning aims at matching customer supply planning logic and imply CPFR type collaboration. Areas components of Demand Management include Customer Experience, Demand Creation, Inventory and Pricing Optimization, Channel Management, Sourcing, Transportation Optimization and Advanced Practices in Technology. [2]

See also

References

  1. ↑ Lee J. Krajewski, Larry P Ritzman, Manoj K. Malhotra: "Operations Management: Process Chain and Value Chains, 8th Edition", page 521. Pearson Education, Inc. 2007, ISBN 0-13-169739-0
  2. ↑ http://www.clresearch.com/research/detail.cfm?guid=7A0DE979-3048-79ED-990D-EB1A1C8DCD9E
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