I have worked on a number of Demand Planning implementations, both actual new system implementations and also new customer/contracts onto an existing system. The actual implementation is the most important phase of the whole Demand Planning process and poor implementations can lead to ineffective forecasting further down the line, worse still your company could be paying a consultant a fortune per day to come back in and sort it out a few months or years later !! (having already incurred significant costs from out of stocks or over stocks !)
There also needs to be an element of simplicity maintained during the implementations. A lot of data will be handled, and there will undoubtedly be a number of intricate processes to learn on the new package, but I have experienced situations where system consultants will come in and blind everybody with all sorts of wonderful forecasting theories that could be used.........but probably in situations that will never occur in your business.
Have they taken the time to understand your business and your data?
There is obviously a sizeable project plan list of requirements to successfully implementing a Demand Planning system or new contract/customer, but here are a few of my headline requirements (based on good and not so good implementations that I have been involved in in my career);
- Quality Data - Accurate historical demand data is an obvious requirement. Ideally at least 3 years worth to build seasonal product profiles where required. And identify reasons for any irregular demand so that it can be flagged accordingly and removed from future forecast calculations. 'Rubbish in, Rubbish out' and all that............
- Understand the Data - Make sure that the time is taken to work with the supplier of the data to fully understand all data i.e. what are the time periods, will all data be relevant to the 'new world'. I knew an external customer once that was capturing demand twice due to uploading actual sales data into the system, but also uploading deployment data between depots (and also treating as sales !). This data was also fed into the initial forecast and supply plan........the NDC was slightly overstocked for the next 3 months !!
- Lower Level Data - is all lower level data relevant? i.e. all customers showing on historical demand my no longer be ordering. Or they may not be part of the new process and order from elsewhere. (wholesalers?). You must dig down into the data to understand it.
- Relevant Forecasting - software providers can sometimes promote system features that are entirely irrelevant to your business. Identify exactly what you will use and focus on these key procedures. You may spend 2 days training on meaningless functionality that you will never use, and not actually get to grips with what you do need to know
- System Training - the implementation is your best chance to get your key planners trained properly. Re-training costs ! Make sure that super users are trained effectively, by this I mean they understand which buttons to press of course, but make sure that the trainers also work on scenarios that are relevant to YOUR BUSINESS. (Not following a template training module full of jargon that has been created by the software owners)
- Promotions/Events - another seemingly obvious one, but you'd be surprised at the amount of customers that 'forget' to issue promotional briefs. Ideally, the information will list all relative events over the next, say, 3 months
- Delists - product delists or product substitutions planned for the next 3 months
- Allow Sufficient Time to Create Forecasts - if it is a new system, you should get plenty of time to create, review and issue the pre go live forecasts. If it is simply a new customer implementation, though, get the information from them weeks in advance of go live. Don't wait until the last minute to try and get up to date data, if you've got 2 to 3 years worth, missing a few weeks won't matter unless something significant has changed in these weeks (and you'll be told of this anyway)
- Forecast by Exception - Plan how you are going to split your products in terms of analysis, so that you concentrate on the variances that affect your business. No point worring about hundreds of products that have variances but these variances have little or no impact on out of stocks or overstocks
- Set SMART targets - linked to point 9, make sure the variance targets are realistic for your planners. There will be a variance on most products, but does this variance impact your business significantly? I have seen planners spending hours every week trying to get average variances down from 5% to 3% on products where a 10% variance doesn't actually matter one jot ! Time should be focused on managing the few variances that do affect service levels or stock valuation.
These are just a few of the steps to a successful implementation. The nature of Demand Planning systems and processes means that there will be a lot to manage and understand, but the above needs to be kept in mind. Make sure that the system is working efficiently for you, rather than having to change all of your processes to 'work around' the system quirks !
E mail me at firstname.lastname@example.org to discuss any actual or potential system or process implementations, or go to our website www.shenwick.co.uk to simply find out more about us