Demand Planning: Reduce Your Effort and Sharpen Your Focus
by James Snyder
Truly understanding demand is an essential component of maximizing revenue for your business.
Demand is quantified by the amount of goods or services the market has a desire to purchase. This concept is often incorrectly attributed to the total number of sales, rather than the more accurate representation of sales made against potential lost sales.
The goal of demand planning is to forecast what size of the market your goods or services will occupy. Accurate demand planning strategically assesses your revenue and determines the investment needed in the products that will resonate with your target market.
Let’s take a look at how sharpening your demand planning focus can lead to improved market share within your chosen vertical.
Identifying Demand Streams
How does your business segment where demand gets created?
There are many factors to consider here. For example, the COVID-19 pandemic drove furniture store sales and traffic to unprecedented heights, a direct result of a population spending more time at home.
While this is an example of a macroeconomic factor, it provides a broad base from which you can begin to narrow your focus.
Is your targeted marketing creating urgency amongst your desired audience? How is the foot traffic in your highest-performing locations?
Having clear visibility into the channels that drive your revenue provides invaluable insight into where to place your demand planning focus. Are you brick and mortar focused, e-commerce or a B2B enterprise?
From there, narrow your focus further to establish your targets. If you’re a brick and mortar business, you’ll need insight into the foot traffic in your stores, as well as the product types that are moving units within them. Should the majority of your business be transacted online, you’ll need metrics to quantify the visitations to your online shop.
Let’s take these insights a step further.
Identifying demand streams effectively means integrating this bottom-up approach with accurate top-down insight. Internally driven factors play a role as well: You can’t assume that your customers are the same everywhere.
Your business should forecast customer segments differently – some of your target audience will come to your products with a degree of former knowledge, some will have absorbed your marketing materials, and still, others will have absolutely no familiarity with your brand or services.
Do you build inventory for stock, or rely on a build-to-order system when forecasting supply? Identifying and understanding these specific demand stream considerations can reduce the headache associated with the efficiency of your business…but are you properly resourced to handle all of these ever-evolving variables?
If your workforce is running ragged trying to pinpoint the changing demands of your business, it might be time to simplify, streamline and sharpen your demand forecasting focus.
By partnering with Allitix, your employees can leave the stress of identifying demand streams to the professionals. Our comprehensive solutions are tailor-made to provide you with insights and forecasting into the key drivers of your business.
Demand streams are only half of your demand planning focus, however – before we approach the solution, you need to understand the impact demand drivers will have on your overall demand planning strategy.
Determining Drivers of Demand
Now that we’ve established your demand streams, it is time to zero in on the drivers that are propelling ‘want’ for your products, goods or services. It is crucial to understand that – while they may sound similar – demand streams and drivers are quite different. Your demand streams are the pre-existing avenues to capitalize on the needs of your customers…drivers of demand are the efforts that enforce that need.
To help understand demand drivers, let’s examine some of the different avenues to satisfy them.
Retail store demand vs web demand. Customers who set foot in your physical locations may arrive looking for a particular item or simply happen upon it while shopping. The in-store availability of the item might drive demand by virtue of scarcity, while today’s online shoppers often cite factors such as cost savings (the number one driver of web demand), easier shopping, a better selection of goods and a faster overall experience as the explanation for their preferred method.
Demand drivers for both examples are varied. For retail, you must consider both the traffic to a store and macroeconomic factors surrounding it. To use our previously-referenced furniture store as an example, new housing developments or a hot real estate market in the area would drive traffic, whereas the effectiveness of your marketing efforts is more likely to power traffic to your website.
Business to business (B2B) vs business to consumer (B2C). B2B marketing is strategic, planned and focused on logical, process-driven purchasing decisions. B2C marketing capitalizes on emotion-driven purchasing decisions. As a result, B2C marketing efforts are designed to capture emotion and encourage spontaneous decision making, while B2B marketing efforts leverage research and data to encourage the interested consumer to consider a purchase over time.
Having in-depth discussions with your team to identify the drivers of your business is crucial to understanding the necessary demand stream strategies that support them. It may be worthwhile to host a formal inquiry to identify both the drivers and the role marketing plays in supporting them.
Congratulations! You and your teammates have pulled into focus the demand streams and drivers integral to your business. Now it’s time to zero in on ways you can reduce your efforts while capitalizing on them.
How Allitix and Anaplan Can Help
Anaplan can be built around the specific and unique needs of your business. By partnering with Allitix, you’ll be trusting your demand planning to a team of dedicated, experienced professionals who are determined to help you reach your objective.
Our team will work with you to segment your demand streams, and tailor easy-to-use and interpret forecasting models based on both streams and drivers. Our advanced analytics modeling provides line-of-sight into ‘what-if’ scenarios and forecasting — so that you’re never reacting off of the proverbial back foot in the face of unprecedented industry shifts.
Allitix brings years of experience to the table in order to create bespoke solutions that can quickly pivot to new approaches. If the past few years have taught us anything, it’s that your business needs to anticipate the unexpected…does your current demand planning strategy possess such agility?
When it comes to critical demand planning strategies for your business, you really can reduce your efforts while sharpening your focus. Contact Allitix today, and we’ll show you how.