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How To Effectively Manage Demand

The document discusses how manufacturers can effectively manage demand using point of sale data and demand sensing and shaping. It explains that predicting consumer demand has always been challenging for manufacturers. While initiatives like VMI, ECR, and CPFR have helped with visibility, capturing true consumer demand remains difficult. The growing availability and accuracy of POS data provides a clearer picture of actual consumer purchases and can help manufacturers better align production with changing demand patterns.

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thiagoalbieri
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18 views

How To Effectively Manage Demand

The document discusses how manufacturers can effectively manage demand using point of sale data and demand sensing and shaping. It explains that predicting consumer demand has always been challenging for manufacturers. While initiatives like VMI, ECR, and CPFR have helped with visibility, capturing true consumer demand remains difficult. The growing availability and accuracy of POS data provides a clearer picture of actual consumer purchases and can help manufacturers better align production with changing demand patterns.

Uploaded by

thiagoalbieri
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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How to Effectively Manage Demand

with Demand Sensing and Shaping


Using Point of Sales Data
By Karin Bursa

P
redicting what and when the demand signals (order history, shipments, initiatives have not achieved the mass
consumer will buy has never been Point of Sales (POS), new product plans, adoption anticipated for several reasons.
an easy process for manufacturers promotions, syndicated data, etc.) to Most of the companies still relying on
or retailers. Burdened by the daunting task calculate their forecasts. product-centric supply chains—in which
of precisely matching supply with demand, Even though CPFR programs have been manufacturers push their goods out into
manufacturers are constantly improving successful in getting consumer-centric retail and wholesale channels—can no
processes to achieve the highest forecast supply chains on the same page, some longer afford to build inventory and wait
accuracy to ensure when the consumer for customers to buy. They need to get as
walks into the store, the product they are close to consumer demand as possible.
looking for is on the shelf. During times of Leveraging POS data is an excellent way.
economic uncertainty, the need for more The growing use of POS data helps
accurate forecasting becomes increasingly manufacturers take a giant step in using
critical as companies work to trim costs consumer driven demand. Over the past
in the supply chain to ensure stability and several years, the availability and accuracy
profitable growth—without sacrificing of POS has increased dramatically.
customer service. POS data is often viewed to give a truer
With this in mind, manufacturers are picture of consumer demand because it
actively looking for the best methods is unencumbered by elements such as
to gain visibility or “sense” consumer batch sizing, shipping quantities, and lead
demand. These efforts have included pro­ times. It can provide an early indicator of
grams such as Vendor Managed Inventory what’s selling and what’s not—critical
(VMI), Efficient Consumer Response information for new product introductions
(ECR), and Collaborative Planning, Fore­ (NPIs) or short shelf-life products.
casting and Replenishment (CPFR). But Karin Bursa This gives manufacturers the lead time
each of these initiatives has challenges necessary to make adjustments in their
and does not necessarily capture true Ms. Bursa, vice president of manufacturing and distribution plans,
consumer demand. With VMI and ECR, marketing at Logility, oversees the ensuring they are appropriately positioned
inventory policy management drives firm’s market positioning, strategy to meet changing demand patterns.
the replenishment process instead of development, and marketing programs. The adoption and availability of
consumer demand. With CPFR the driver She is a leader in strategic vision as technology that captures and analyzes POS
is demand planning. CPFR is focused on well as the development, support, data has led to its increasing integration
a broader buyer-seller relationship, which and marketing of software solutions into the demand management process.
gives the manufacturer greater visibility of for supply chain management and Manufacturers that have successfully
demand along with more time to respond manufacturing. Before Logility, she was incorporated POS data into the demand
to specific changes including planned a consultant for Accenture (formerly management process are experiencing
promotions or special events. Andersen Consulting). She has been increased forecast accuracy, improved
With demand planning as the key engaged in innovative demand- NPIs, lower out-of-stocks, and decreased
driver in the CPFR process, the challenge driven manufacturing, supply chain total costs. According to AMR Research,
is deciding which demand signals will management, and B2B collaboration “Reducing out-of-stocks can contribute as
drive the collaboration process. Many initiatives such as VICS CPFR and much as 4% to the bottom line.”
companies prefer to leverage multiple Flow Manufacturing. For example, when a consumer goes

26 THE JOURNAL OF BUSINESS FORECASTING, WINTER 2008-2009

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