The Diverse Realities of Demand Planning

I recently engaged in a discussion on a LinkedIn post and blog by a well-known supply chain thought leader with a significant following. The post delved into the state of demand planning in supply chain management, and I shared my perspective when she invited comments. It seems my input may have stirred some controversy. There was a follow-up post and blog that addressed my comments.

I thank the author for the time and dedication spent exploring this critical topic. Lora is a renowned authority on all things supply chain; I greatly respect her viewpoints and research. However, I also firmly believe in the value of offering alternative views based on extensive hands-on experience.

Although valuable and clearly leading edge for specific segments of the industry, her insights may not fully encompass the needs and challenges faced by a broader spectrum of manufacturers, particularly those with less mature supply chains.

Experience vs. Research and Reality of Implementation

It’s important to acknowledge the distinction between research and practical implementation. While research and testing offer valuable insights and propose innovative methodologies, they may not always align seamlessly with real-world applications. Drawing from my 35 years of hands-on experience in the field, I can attest that what appears promising in tests and pilots may encounter challenges in actual practice.

The writer advocates for an ‘outside-in’ approach to enhance demand planning, thereby minimizing the ‘bullwhip effect,’ a highly innovative perspective that merits consideration. I wish most organizations were at the level of maturity where they can implement such models and measure the bullwhip effect. However, it’s essential to remember that many businesses may not possess the resources, expertise, or even the necessity to adopt such intricate systems. Not every solution suits every context, and businesses vary significantly in terms of complexity and scale.”

Diversity of Solutions in Demand Planning

It’s important to recognize that there’s no universal formula for effective demand planning. Various approaches can lead to successful outcomes, each with its own merits. While the writer appears to discredit supply-centric techniques entirely, it’s worth acknowledging that these methods have demonstrated their effectiveness across various scenarios in many industries and companies of various sizes.

Outside-in demand planning often shines in businesses operating within rapidly changing markets, where customer preferences exhibit significant fluctuations. Conversely, supply-centric solutions may find a more fitting application in companies whose primary concerns revolve around supply chain efficiencies, cost reduction, or stable and predictable demand patterns. Ideally, a hybrid approach that combines the strengths of both strategies can yield a well-balanced and effective demand-planning solution.

It’s important to refrain from dismissing proponents of supply-side solutions as ‘disbelievers’ or ‘Doubting Thomases.’ Such comparisons can be unproductive and do not reflect the complexity of the issue. Just as the world’s understanding of its shape evolved over time, so too should our approach to demand planning, recognizing the diverse range of solutions that can lead to success.

Validity of Traditional Systems

Traditional methodologies may appear outdated when viewed through the lens of academic research. Still, it is crucial to remember that many of these approaches were crafted as practical solutions to real-world challenges. Having the ability to respond and react quickly with appropriate agility to a changing plan is sound supply chain management. The author’s research may cater to Fortune 1000 companies, but what about the other 567,000 manufacturers in the United States who require different approaches?

Openness to Innovation in Demand Planning

In the dynamic world of supply chain management, it’s crucial to recognize the diversity of perspectives that enrich our field. While the blog post may express a particular viewpoint, I believe in the value of embracing a wide range of insights. We appreciate the contributions of academic research and the wisdom derived from practical experience. Much of, if not most, change should be approached incrementally and rooted in data, taking into account the existing systems and constraints that businesses encounter daily.

I aim to promote an open dialogue that celebrates these diverse approaches, ultimately striving for a more effective and efficient supply chain. Supply chain management is inherently complex and benefits from a wide array of perspectives. Academic research is invaluable for the fresh insights it brings, but practical experience offers a necessary reality check, grounding us in pragmatism. I wholeheartedly welcome an open and constructive dialogue that encompasses both the academic and the practical aspects as we collectively strive for a more effective and efficient supply chain.

If you want to discuss supply chain planning and procurement excellence, let’s chat. I want to know your thoughts.

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