Understanding consumer demand has always been a critical consideration for consumer products (CP) companies. Accurate forecasts, optimal inventory, on time deliveries, on shelf availability – these considerations and more are all driven by a solid understanding of actual consumer demand at retail and through other, alternative sales channels.
But how do CP companies define consumer demand when it comes to planning and forecasting? It turns out it depends on who you ask. Planning and forecasting processes such as Sales & Operations Planning (S&OP) have traditionally been managed by the supply chain organization usually on a 12 to 18-month rolling basis with periodic inputs from other teams to help build a cross-functional consensus demand forecast.
However, the pace of business has accelerated in recent years. And, at the same time, advanced technologies such as in-memory computing have become widely available and enable real-time modeling and optimization against massive volumes of highly granular data are widely available. These two factors combined have changed the scale and scope of planning and forecasting and, along with it, the dimensions of demand that CP companies must reconcile in order ensure they can meet consumer demand whenever and wherever it occurs.
How have these processes changed? Consider S&OP. CP companies may still plan against 12 or 18-month time horizon. But the accelerating pace of business combined with the real-time capabilities of in-memory computing are enabling CP companies to change the cadence of their planning. CP companies now have the capacity to update forecasts and simulate business outcomes in, for example, 30, 60, and 90-day horizons based on real-time visibility to actual consumer demand.
This gives supply chain teams the ability to assess implications for longer-term demand forecasts and to enable short term adjustments to ensure the achievement of overall revenue, volume and profitability objectives. .The frequency with which supply chain teams are updating their plans has broader implications beyond traditional S&OP, requiring a substantially more coordinated and collaborative approach to planning and forecasting with other teams – in other words, true cross-functional integrated business planning.
The challenge here is that different teams define and plan for demand in different ways. For example, the supply chain team may plan in units, while marketing would plan for demand by SKU, sales by case count and finance by revenue. Coordinating and reconciling these varying dimensions and perspectives on demand in a way that’s integrated across business functions is critical. A true consensus view enables procurement to coordinate with suppliers for commodities, ingredients and other materials purchasing. Or, manufacturing to ensure adequate raw materials supply to produce sufficient finished goods inventory to meet forecast demand across those various dimensions.
Bringing these varying perspectives on demand together through a coordinated, collaborative approach enabled by real-time in memory solutions powered by the SAP HANA Platform is a major emphasis for SAP for Consumer Products. If you’re planning to attend SAPPHIRENOW and would like to learn, more please join us in the Consumer Products area of the Consumer Industries campus for several sessions that may be of interest.
First, Ted Combs, VP Consumer Products Industry Business Unit will host a microforum on Integrated Business Planning on Wednesday May 6th from 4:00 – 4:45 PM ET. In this session, Ted will share information on recent innovations for integrated business planning as well as help to facilitate a broader discussion on industry best practices, emerging trends and opportunities and key business process considerations.
In addition, if you’re interested in seeing SAP solutions for integrated business planning in action, you can also see a live demonstration in two separate demo theater sessions, first on Wednesday May 6th from 11:00 – 11:20 a.m. ET and again on Wednesday evening from 5:30 – 5:50 p.m. ET.
Both sessions will provide an overview of the opportunities available for CP companies with solutions for true cross-functional integrated business planning enabled by SAP HANA.