Plan For Demand By Placing The Customer At The Heart Of Your Operations

David Vallejo and Richard Howells

In today’s on-demand world, consumers expect to order anything from anywhere on any device and have it delivered at any time to any location. Any questions?

For businesses, the only way to succeed is to put customers at the heart of your processes. This means the ability to sense, predict, and respond to their needs on the fly and to design and deliver individualized products and services without sacrificing scale, speed, or profitability.

Consumer products companies in particular need to provide personal, relevant, and simple shopping experiences – which implies commerce is seamless, technology is invisible, and privacy, security, and trust are assured.

Plan for new business models

In the never-ending challenge of attracting and retaining customers, bringing new products to market is not enough. To get closer to the consumer and actual demand, many companies deploy the direct-to-consumer model as a new revenue opportunity. For examples, look no further than how Dollar Shave Club and Harry’s have impacted the razor industry or how Allbirds’ “non-branding” success is capturing market share in the shoe industry.

“As-a-service” models that comprise monthly subscriptions rather than buying physical products continue to dominate. Streaming services like Netflix and Spotify have revolutionized these industries.

So what happens when you’re too busy to go clothes shopping? No problem, Under Armor’s ArmourBox, a personalized subscription outfitting service, can help. Too busy to buy groceries? Numerous subscription food services (such as Home Chef, Sun Basket, and Blue Apron) will help plan your meals and stock your shelves.

And as customers look for more unique experiences, there will be a surge in the number of individualized, customized, and personalized product offerings. For example, Nestle recently launched made-to-order luxury KitKats with over 1,500 flavor combinations, just in time for the Christmas market in the UK.

Keep sustainability top of mind

It is clear that consumers want more sustainable products, manufactured with sustainable processes by sustainable companies. The challenge is that around 90% of the fast-moving consumer goods (FMCG) sector’s carbon emissions lie in the value chain. This put the spotlight directly on designing more sustainable products and reducing the carbon footprint in manufacturing and logistics processes. P&G, in an effort to reduce the amount of water used in its products, recently announced the Warterless brand of shampoos.

Plan for demand

Consumer products companies strive to gain enhanced business insights to be able to analyze sales planning data down to the individual brand level in order to optimize business results. This requires integrated business planning processes to respond to real-life situations.

It all starts with having a real-time view of demand. What is hot, what is not. What products are trending on social media, being hyped in marketing campaigns, or being influenced by outside influences such as weather or local events and activities.

Only when you have real-time visibility to all demand, from both traditional sources such as sales orders and forecasts as well as unstructured sentiment, point-of-sale, and social data, can you have full demand transparency for short-term, mid-term, and long-term planning processes. You can react faster to short-term demand changes with algorithms based on pattern recognition, enable more effective product deployment based on short-term demand, and collaborate to ensure the most accurate forecast.

Break down departmental silos

In most companies, having a plan is not a problem. Everybody has a plan. Sales has a plan of what it will sell, production has a plan for what to produce, purchasing knows what it wants to buy. But all these plans are dysfunctional if they aren’t aligned into a cross-departmental sales and operations plan that balances inventory, service levels, and profitability.

And as customers become more demanding, product lifecycles shorten, and supply chains get more complex, the speed and agility of your planning processes to support profitable operations becomes critical. To protect already shrinking margins, you need to optimize product mix, customer mix, ingredients and dry goods sourcing, seasonality, and supply chain costs.

Respond to change

It’s often said that “you plan in the real world and execute in the real world. And in the real world…” Well, you know what happens! The key is to sense and respond when things don’t go according to plan.

Good planning is critical to success, but when you get a surge in demand due to a change in the weather or a supply disruption due to a port closing, being able to sense or even predict an opportunity or disruption and rapidly replan is as just as important.

The ability to rapidly simulate alternate scenarios, perform what-if analysis, and compare options is critical to making informed and profitable adjustments to the plan.

Optimize inventory

Consumer goods companies’ source raw materials from all around the globe and often rely on a multi-tiered network of outsourced manufacturers, distribution centers, and retailers to represent their brand to the market. Ensuring that you can balance and maximize the efficiency and costs of inventory and working capital at each tier in the network and ensure customer service level is a must in what is often a low-margin business.

To learn more about best practices for integrated business planning in the consumer products industry, download the IDC report on digital business planning.

This article originally appeared of Forbes SAP BrandVoice.


David Vallejo

About David Vallejo

David Vallejo is globally responsible for solution management and go-to-market strategies for the SAP Digital Business Planning portfolio. As supply chain veteran, he specializes on driving innovation and working with companies across industries to adopt new ways to drive business outcomes. David has held various leadership roles within SAP – most recently driving the successful launch of the SAP Ariba supply chain business network – and ran solution management for other supply chain cloud vendors like E2open and icon-scm. He was awarded the “Pros-to-Know” award from the Supply and Demand Chain Executive Board and holds a degree in computer science from the university of applied science in Mannheim.

About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.