Customer Demand Planning
Encyclopedia
Customer Demand Planning (CDP) is a business-planning process, that enables sales teams (and customers) to develop demand forecasts as input to service-planning processes, production, inventory planning and revenue planning.
s. Generally, the first step of CDP is to forecast
product demand. A manager can plan
resource deployment in accordance with the resulting forecasts. In other words: it's a bottom-up approach vs. the a top down planning. Associated risks with this method are: Low forecast accuracy and numbers of planners required. There are various software system
s created by companies such as Avercast
, Demand Solutions
, SAS System
, Manugistics
, Petrolsoft Corporation
(now Aspen Technology) and StatSoft
that help businesses forecast demand and plan operations. To test the added value of implementing bottom-up approach, SAP APO or Fastprod.com applications are providing simulations functionalities to estimate the resulting Demand Forecast Accuracy (e.g. POS sales ; Sales invoices ; shipments, etc.)
In the manufacturer to retailer model, customer collaborative partnerships have been a dominant theme since the 1990s. Although there was a lot of energy behind CPFR, manufacturers and retailers are adopting different versions of collaborative forecasting and replenishment strategies now. These include Collaborative-VMI, CPFR, Account Based Forecasting, CMI, Shared Single Forecast and replenishment etc.
The Demand management
in the 21st Century is a more complete view of the business.
Demand Management is not merely forecasting. Demand management strives to manage all the activities associated with discovering markets, planning products or services for those markets and then fulfilling the customers ‘demand’. It is an integrative set of processes across, not just the enterprise, but the trade partner network.
Do you really understand your market? Are you sure you know who your customer is and what draws them to your business? And when they get there are they actually happy with your assortment—your product offering and service? And even if they buy, are you getting the wallet share you could be getting?
These are profound questions for any business.
Most businesses think they can answer the first question, somewhat. They have a characterization of their customer, an archetype, a segmentation model that describes their customer base. But when you probe further into even the best firms, they admit that these models are often insufficiently mapped to the actual customers who spend with them. And they have few programs, if any to access those who don't spend but could be spending.
The challenges and complexities faced by the retailer are somewhat different than the challenges faced by suppliers (manufacturers and distributors). Therefore, the demand management technology for the merchant is somewhat different than for the brand or manufacturer on the supply-side.
Areas components of Demand Management include Customer Experience, Demand Creation, Inventory and Pricing Optimization, Channel Management, Sourcing, Transportation Optimization and Advanced Practices in Technology.
http://www.clresearch.com/research/detail.cfm?guid=7A0DE979-3048-79ED-990D-EB1A1C8DCD9E
Customer Demand Management today is supported by a new generation of web technology—Marketing Automation—or Demand Creation applications. New models exist for customer segmentation.
Definition of CDP
CDP is a vital aspect of managing value chainValue chain
The value chain, is a concept from business management that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.-Firm Level:...
s. Generally, the first step of CDP is to forecast
Forecasting
Forecasting is the process of making statements about events whose actual outcomes have not yet been observed. A commonplace example might be estimation for some variable of interest at some specified future date. Prediction is a similar, but more general term...
product demand. A manager can plan
Planning
Planning in organizations and public policy is both the organizational process of creating and maintaining a plan; and the psychological process of thinking about the activities required to create a desired goal on some scale. As such, it is a fundamental property of intelligent behavior...
resource deployment in accordance with the resulting forecasts. In other words: it's a bottom-up approach vs. the a top down planning. Associated risks with this method are: Low forecast accuracy and numbers of planners required. There are various software system
Software system
A software system is a system based on software forming part of a computer system . The term "software system" is often used as a synonym of computer program or software; is related to the application of systems theory approaches in software engineering context and are used to study large and...
s created by companies such as Avercast
Avercast
Avercast is a software company that develops, licenses, and supports a wide range of supply chain management software to aid with planning and forecasting.-Company Overview:Avercast is an international software company headquartered in Rexburg, Idaho, USA...
, Demand Solutions
Demand Solutions
Demand Solutions is a software company specializing in supply chain management, inventory planning, and forecast management software for small and midsized enterprises .- Company Overview :...
, SAS System
SAS System
SAS is an integrated system of software products provided by SAS Institute Inc. that enables programmers to perform:* retrieval, management, and mining* report writing and graphics* statistical analysis...
, Manugistics
Manugistics
Manugistics Group, Inc. was a company that developed and marketed software applications, principally for resource planning and supply chain management, with clients around the world....
, Petrolsoft Corporation
Petrolsoft Corporation
Petrolsoft Corporation was a supply chain management software company with a focus on the petroleum industry.Petrolsoft Corporation was founded at Stanford University in 1989 by Bill Miller and David Gamboa as Petrolsoft Software Group. It was later incorporated in 1992...
(now Aspen Technology) and StatSoft
StatSoft
StatSoft is a global provider of enterprise and desktop software for data analysis, data management, data visualization, data mining , and quality control.-Company History:...
that help businesses forecast demand and plan operations. To test the added value of implementing bottom-up approach, SAP APO or Fastprod.com applications are providing simulations functionalities to estimate the resulting Demand Forecast Accuracy (e.g. POS sales ; Sales invoices ; shipments, etc.)
In the manufacturer to retailer model, customer collaborative partnerships have been a dominant theme since the 1990s. Although there was a lot of energy behind CPFR, manufacturers and retailers are adopting different versions of collaborative forecasting and replenishment strategies now. These include Collaborative-VMI, CPFR, Account Based Forecasting, CMI, Shared Single Forecast and replenishment etc.
The Demand management
Demand management
Demand management is a planning methodology used to manage forecasted demand.-Demand management in economics:In economics, demand management is the art or science of controlling economic demand to avoid a recession...
in the 21st Century is a more complete view of the business.
Demand Management is not merely forecasting. Demand management strives to manage all the activities associated with discovering markets, planning products or services for those markets and then fulfilling the customers ‘demand’. It is an integrative set of processes across, not just the enterprise, but the trade partner network.
Do you really understand your market? Are you sure you know who your customer is and what draws them to your business? And when they get there are they actually happy with your assortment—your product offering and service? And even if they buy, are you getting the wallet share you could be getting?
These are profound questions for any business.
Most businesses think they can answer the first question, somewhat. They have a characterization of their customer, an archetype, a segmentation model that describes their customer base. But when you probe further into even the best firms, they admit that these models are often insufficiently mapped to the actual customers who spend with them. And they have few programs, if any to access those who don't spend but could be spending.
Discovering markets
Discovering markets requires a sophisticated and integrated set of programs and processes. They provide the information necessary to analyze the mindset of potential customers, and then draw them in to become paying customers. Now add the challenge of managing the what, when and how much of the millions of SKUs should be designed, made, distributed, and displayed. Again add pricing and inventory optimization applications, which help determine stocking and pricing strategies, by segment, by territory, by channel, and down to the shelf level. You will very quickly realize that Merchandise and Assortment Planning is the essential workhorse of retail demand management.The challenges and complexities faced by the retailer are somewhat different than the challenges faced by suppliers (manufacturers and distributors). Therefore, the demand management technology for the merchant is somewhat different than for the brand or manufacturer on the supply-side.
Areas components of Demand Management include Customer Experience, Demand Creation, Inventory and Pricing Optimization, Channel Management, Sourcing, Transportation Optimization and Advanced Practices in Technology.
http://www.clresearch.com/research/detail.cfm?guid=7A0DE979-3048-79ED-990D-EB1A1C8DCD9E
Customer Demand Management today is supported by a new generation of web technology—Marketing Automation—or Demand Creation applications. New models exist for customer segmentation.