Forecasting market demand and the subsequent materials supply required to fulfill that demand remains incredibly challenging for supply chain professionals despite advances in data analytics and the wide variety of technology solutions designed to support supply chain planning processes. No matter how efficient the organization, forecasting demand remains one of the most difficult components of the supply planning process to consistently manage. Furthermore, finding a highly skilled individual who truly understands the nuances of demand planning proves a significant challenge for organizations regardless of size or industry. In this blog, I will point out some of the critical skills necessary for successful demand planning, the challenges that pop up when these skills are lacking, and how to develop your demand planning team.
Demand planning requires key skills
When it comes to successful demand planning, it is important for the person within that role to possess a crucial skill set which includes:
- Analytical capability and data modeling: The capability to work with large datasets and develop diagnostic, predictive, and prescriptive analytics models is a critical prerequisite for demand planners. At a minimum, a demand planner must have a clear understanding of the analytics ecosystem and a foundational understanding of statistics and probability.
- Business acumen: It should go without saying that the ability to understand the dynamics of the business – both commercially and operationally – remain crucial to successful demand planning. Beyond the data crunch, understanding the “why” and the business impact of commercial forecast drivers is a pivotal skill.
- Ability to influence: As the unbiased arbiter, the demand planner should have the ability to influence decisions and translate business impact to stakeholders across different organizational functions well beyond the supply chain.
Possession of the skills defined above will play a significant role in achieving effective supply chain planning.
Additional planning challenges created by a skills gap
Common sense dictates an absence of the aforementioned skills will lead to further challenges and setbacks in an organization’s planning processes. Here are some of the biggest challenges a lack of skilled demand planners can create:
- With a skills gap, organizations lack the ability to test and evaluate alternate scenarios as part of the planning process. As Steven Johnson points out in a recent essay, successful planning involves developing a diverse team tasked with the creation of multiple outcomes, especially negative ones, and working backwards to identify steps the organization should seek to avoid.
- In order for demand planners to be successful, they must recognize the need to challenge confirmation bias and hedging against hyperbolic discounting (i.e., focusing on the present at the expense of the future). An inability or unwillingness to challenge these mindsets, often due to a homogeneous team make-up, prevents the organization from truly understanding the trade-offs alternative scenarios can provide in order to determine the best path forward.
- In addition to the absence of talent, many organizations experience shortcomings in their demand planning often driven by time restraints and an absence of technical capability or technology infrastructure that are necessary to implement successful planning processes.
Tips for addressing and eliminating the talent gap in supply chain planning
The continuing increase in the supply chain planning talent gap is imminent as supply chain leaders are finding it harder to fill these roles and maintain qualified staff members. Despite the absence of personnel, the organization needs to still function and can seek to mitigate risk with these tips:
- Automate away the trivial “many,” focus on the precious “few.” That is, evaluate your planning processes to determine where mundane, time consuming tasks can be automated in order to shift time and resources to elements that require substantial focus and effort. Your organization may be served best by adopting a composite Planning-as-a-Service resource model for creating a baseline statistical forecast with an external provider while managing the consensus process internally.
- One of the best strategies an organization can adopt to prevent talent depletion includes providing ongoing professional growth and career advancement opportunities to new recruits. This includes having staff members engage in “tours of duty” across commercial and operations in order to gain a full understanding and appreciation as to impact upon business.
As supply chain evolution increases in complexity, organizations will continue to see the skill gap widen as demand planning positions become harder to fulfill. As a result, I expect organizations will seek to augment their current team and capability with technology and analytics service providers who staff these specialized personnel in order to maintain the efficient demand planning processes needed to remain competitive in today’s marketplace. Organizations should begin by assessing current supply planning strategies to determine where current gaps exist and how the aforementioned tips can be applied to improve demand planning efforts.
Sanjiv Raman is a Sr. Manager in the Integrated Demand & Supply Planning practice at Chainalytics. He has a strong background in optimization and solution architecture and is passionate about helping companies apply technology and analytics in their planning environments to drive measurable improvements.