article_5_rules_consensus_demand

Ok, Demand Managers, you are officially recognized as a part of the business. Senior management understands the
importance of accurate demand plans (sort of), and your sales and marketing teams show up for the meetings you
have called. Already you may have gained significant ground. And yet you know that you are not getting the best
results possible. Team members are seldom prepared, and watching people rationalize their volume projections goes
from ludicrous to downright painful. The key issues are not always discussed, and even when they are, feelings and
intuition always win out.

There are five key rules to lead a successful consensus demand meeting. They are listed in sequential order, but it’s
not necessary to follow each of these to a T to make improvements. Each follows simple practical applications of the
Effective Practice Process Template for Demand Planning. These 5 rules are: understanding key problem areas;
preparing yourself with analysis; sharing your findings beforehand; exciting and involving stakeholders; and providing
leading facilitation.

1. Understand key problem areas
The Demand Planning meeting should be a concise meeting. For most businesses, this means that the team cannot
go item by item, or even product group by product group, in any detail. Thus, it is the job of the Demand Planner to
set the business focus for everyone upfront. Your job is to pick the key products and families that need the most
attention in a particular meeting. New product introductions and major product transitions will usually make it to the
top of the list. Also, products with high error and especially cumulative forecast bias should be addressed. If your
structure is set up by region, channel, or other organization, pick the top two or three points that need addressing.
Hash out smaller issues with individual sales and marketing representatives.

2. Prepare yourself with analysis
Once the key discussion areas are identified, develop a well-thought out point of view. Too often we demand
planners use formulaic standard approaches that get us nowhere.

A common statement by planners is “The forecast accuracy on this group is not good; we need to forecast better.”
Although the sentiment seems proactive, we are not helping the business. In a moment of clarity at one Demand
Meeting, a sales manager responded to the “we need to forecast better” edict. His response to the Demand Planner
was—“Well, Smarty Pants you spend all your time doing only forecasting. You tell me what the problem is.”

Here’s another scenario that Demand Planners propose: “Our suggested forecast is X, but the statistical forecast tells
us it should be Y.” Statistically-generated forecasts play an important role in Demand Planning, but they are clearly
limited for all situations. Also, because people may not understand the basis of the statistical forecast, they simply
see it as another competing forecast—one that usually loses.

Instead, review the data to understand what is happening with the product or family. Decide for yourself if trend,
seasonality, promotions, or other activity is driving demand. If you have enough information to make a reasonable
conjecture, then put your ideas into a meaningful business story. After all, if you believe that you have the answer,
you will have to convince others.

3. Share your findings beforehand
No one likes surprises. If you are a Sales Manager and your volume projections are being questioned in front of your
boss that is a surprise you really won’t like. As Demand Managers, we have to realize planning is not just a fact-
based, analytical discussion—it involves people, emotions, and even careers.

As a Demand Manager I would always have a short sit-down with each of the Sales and Marketing representatives. In
most cases, I would share information with them; sometimes they would help me to understand demand patterns
based on their knowledge. We would test each other’s ideas and have a mini-consensus right there and then.

However, some of the representatives were what I term “logic-resistant” planners. Because of the other outside
influences, they were not motivated to call out accurate numbers. In those cases, I would still brief them in what I
thought and how they should modify their estimates. I would let them know beforehand that I would be sharing my
point of view (either you tell them or I will). In these scenarios, most sales/marketing reps would consider their
positions, and move to partially or fully to a better position. Occasionally, they would put up a stronger argument for
their estimates—and in some cases they were right and I was wrong.

4. Excite and involve stakeholders
Commercial Vice Presidents don’t get excited about forecasting. It’s something their people have to do. They don’t
even get excited about forecasting well. No Sales VP was rewarded for perfect forecasts while missing their sales
targets. With that in mind, there are still ways to get energy and support from your most important if reluctant
stakeholder.

A Demand Manager has the ability to drive sales. This is a very powerful statement, and it is true. The Demand
Manager can show which items are performing well or poorly, but more importantly they can tell why. A successful
Demand Manager can: recognize which product within a group that is growing and needs additional support.; target a
region that is not hitting its distribution targets and is falling short; identify if a promotion gave the lift that was
expected. When a Demand Planner provides these key insights, s/he helps the Sales and Marketing VP’s to focus
their resources, ultimately affecting the top line.

As to bottom line performance, the Demand Manager also plays a role. By tracking forecast accuracy, one has
started the process of demonstrating operational efficiency. When forecast accuracy is linked to operational costs
such as finished goods inventory, production OT, and materials costs, then the Demand Planning team can translate
their efforts into dollars and cents.

5. Provide leading facilitation
The first four rules for a successful Consensus Demand Meeting are activities that do not actually take place in the
meeting itself! The last rule, however, is employed within the meeting and is perhaps the most important of all. The
essence of this rule is that the Demand Manager is a leader of this meeting. Yes, the Sales and Marketing VP may be
the owner of the Sales Forecast and may make the final call on all projections. In that sense, the Demand Manager
works for him. By taking a trusted leadership role, the Demand Manager uses his credibility to lead the organization
to the best possible volume estimate.

The Demand Manager must be a facilitator. By that, we mean that s/he must coordinate the meeting, lead the
discussion, and direct the team to the key forecast areas (Rule 1). The Demand Manager must share their analysis
(Rule 2), but more importantly let all parties have input in the meeting. After all, the idea is to build consensus for the
plan. Hopefully, you have already had discussions with the representatives (Rule 3), and have briefed the
stakeholders on hot spots (Rule 4).

Although the facilitator role is key, the trick is to provide a bit of “leading” facilitation. After all, the Demand Manager
does have a point of view, and has formed an opinion through their analysis. Sometimes, that will take the form of a
statement/question such as the following.

A Typical Scenario
“OK, we have missed our projection of Product Group A for two months and inventory is building. The trends show
that volume is declining by 10% year over year, and we don’t have any strong direction from our customer base.
Should we take the volume down on this one? Can we look for other opportunity areas in the portfolio?”

In this example, the Demand Manager did a few things. The performance was stated and what the effects will be for
the supply chain. The analysis was briefly presented, as well as the market intelligence. Then, a recommendation
was made in the form of a question, leading to facilitation. Finally, the Demand Manager takes the lead after realizing
that the volume call-off has ramifications for the Commercial VP, to potentially find upside opportunities.

The five rules to a successful Consensus Demand Meeting should provide the kick start any Demand Manager
needs. Of course, this always means a bit more work! More importantly, it reflects a shift in the role—from an analyst
to a business leader and key support staff. Hopefully you will find success in these five rules. Good luck!

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