Demand Planning: Part 3
Building A Demand Planning Group: Roles and Skillsets to Consider
By Jeff Ziegler
As discussed in Part 2, there may be other functions combined with demand planning in your group. The following are the critical roles we see needed to support a robust demand planning process:
- Forecasting analytics: This role requires a lot of day-to-day analysis of the forecast, usually for a subset of the company’s products. They are looking at the forecast exceptions and deciding how to correct them, and determining forecasts for new items and lifts for promotions to load into the forecasting tool. This role requires good analytical ability, knowledge of forecasting and business acumen to determine whether forecast changes make sense.
- Technical/forecasting: This role requires a great understanding of the forecasting algorithms, parameters and reporting supporting the demand planning organization. This is the person you call when you have a question on how the system works, and acts as the demand planning/IT interface. This role requires a high degree of forecasting knowledge and technical ability.
- Consensus building and collaboration: This role interacts with other functions across the company, usually for a subset of the company’s products. People in this role are constantly collecting information that influences the forecast, collaborating on forecast levels, and achieving consensus among many functions with different incentives related to the forecast. It requires deep soft skills, business acumen and good knowledge of forecasting.
Depending on the size of the demand planning organization you’re putting together, these roles can either be combined in individual jobs or be in completely separate jobs. In certain cases, one person is able to handle several thousand inexpensive commodity items, while another can only handle a hundred or so items that are expensive, heavily promoted and/or fashion oriented. These roles don’t even need to be in the same organization — the technical role could go to IT and the consensus building role could be combined with a buyer or inventory planning role. That said, I do recommend keeping them in one organization as a means to maintain accountability for forecast accuracy.
Results from a recent survey published in the JDA Demand Management 2015 Report showed that the average number of demand planners in an organization was 15, but this varies widely by size of company and industry. Here’s a general breakdown:
- For groups of one to three, you simply need to give each person all roles. Not only do you not have the bandwidth to differentiate, but also if one person leaves or goes on vacation, you’ll need backup.
- For groups of four to 10, consider carving out one or two people for the technical forecasting role (perhaps in addition to taking on a minor portion of the other roles) and combining forecasting analytics and consensus building in the other two to eight. This allows backup in the roles without trying to differentiate too much. The remaining two to eight people could be split into entry level and senior roles.
- For groups larger than 10, you have the luxury of differentiating the roles. This gives you the advantages of efficiency (both in cost and productivity) and means you can better support career pathing within the group — e.g. use the forecasting/analytical role as the entry point, but intentionally hire people with potential to grow into the other roles. This is key because continuity in the demand planning group is critical, as is the ability to grow skillsets organically versus spending a huge amount of time and effort recruiting at a higher level.
The good news is that advances in demand planning tools have both increased productivity of the demand planning function and reduced the need for everybody doing demand planning to be a forecasting expert, allowing for time and attention on the consensus building role. This also allows for the demand planning function to be more easily combined with other functions, but the three roles above still need to be done, regardless of where the people sit or what else they are doing. There is no right or wrong, so think through what works best for your company based on its size and internal structure.
In the first parts of this series, we’ve explored whether we should have a demand planning group, what processes it should support and what roles it needs. In the final part of this series, we put it all together to determine where best a demand planning group should sit – within the sales group, merchandising, supply chain, finance, etc. – so as to maximize its impact on the bottom line.
Jeff Ziegler is the senior director of solutions strategy at JDA Software.