Mindmap for Demand Orchestration

In the global economy, ever-higher customer expectations combined with demographic and economic shifts are making it increasingly difficult to predict customer demand. Adequate forecasting and demand planning is essential if supply chains are to deliver products in line with the required service level. Supply Chain Movement has collaborated with Logility, a provider  of supply chain software, to devise this Demand Orchestration Mindmap outlining the route, with road signs indicating potential hazards along the way.

Mindmap manual

Sales demand is becoming ever-more difficult to predict as a result of demographic changes such as the aging population and urbanisation. Emerging markets are causing market growth to shift towards developing regions, but there is also an upturn in near-shoring as companies respond to supply chain risks by relocating their manufacturing activities closer to their major sales markets. The decline in brand loyalty along with the rise of omnichannel retail and ‘social buying’ via mobile apps are making it more challenging to forecast the demand for products and services. Furthermore, younger generations are placing an ever-higher value on sustainability. Demand orchestration requires a structured approach: Plan.

Each of the various departments within a company reacts to these trends differently. Finance conducts more analysis. Marketing places a heavier focus on price promotions and new product introductions, while Sales tends to look for customer-specific solutions. The Supply Chain department is under pressure due to increased product differentiation and higher agreed service levels. IT is expected to provide more analysis, with the added burden of extra security. And HR struggles to cope with a shortage of supply chain talent. This impact on companies cries out for well-orchestrated action: Do.

The supply chain challenges are substantial. The planning department needs more sales data in order to forecast the demand. For Purchasing, the horizon of the frozen period is crucial. Production wants to apply more postponement in order to customise the products to client requirements as late as possible in the process, and meanwhile the batches are becoming smaller all the time. Distribution is under increased pressure as a result of later cut-off times and more complex shipments. These supply chain challenges require clear evaluation of the possible solutions for demand orchestration: Check.

Demand planning can be structurally improved through the use of multiple demand signals, forecasting methodologies and trend analysis. It is advisable to take a multidimensional approach to forecasting at various levels of products and geographical regions. The application of product lifecycle management in demand planning takes the phase of each stock keeping unit (SKU) into account. This structured approach enables companies to manage customer demand more effectively: Act.