Executive Briefings

Improving Sales Revenue with Demand Management

A new report from Aberdeen Group highlights the specific approaches that companies with different types of supply chains need to adopt with respect to demand management. The report is titled "Demand Management: Enabling Sell Side Collaboration to Improve Sales Revenue."

"In these times of economic uncertainty and global credit crunch, companies are actively seeking smart strategies for managing demand volatility," says Nari Viswanathan, vice president and principal analyst, Aberdeen. "Traditional approaches of solely focusing on being demand-driven from a demand-planning perspective are not adequate. Companies need to balance demand planning with short-term responsive strategies."

To identify top-performing companies in demand management, Aberdeen looked to four key measures: forecast accuracy at the product family level; forecast accuracy at the SKU level; cash conversion cycle; and customer service levels. Top-performing companies are able to achieve markedly better performance across these measures, which have a significant impact on business results.

Between those top-performing enterprises and their peers, there are some notable differences in the tools they use for demand management. Specifically, high-performing companies are 1.6 times more likely to use a "best of breed" solution, and are 30 percent less likely to use spreadsheets to solve demand-management problems. "In leveraging demand-management technologies, top performers are focusing on leveraging the tools beyond out-of-the-box statistical forecasting and doing external collaboration, allocation of forecasts to lower levels, and customer level forecasting for improving customer service levels," notes Viswanathan. Beyond technology adoption, top performers are also more likely than their peers to create a single demand forecast with inputs from multiple roles in the company, as well as to have the ability to include promotions and other demand-shaping activity into demand forecasts.

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A new report from Aberdeen Group highlights the specific approaches that companies with different types of supply chains need to adopt with respect to demand management. The report is titled "Demand Management: Enabling Sell Side Collaboration to Improve Sales Revenue."

"In these times of economic uncertainty and global credit crunch, companies are actively seeking smart strategies for managing demand volatility," says Nari Viswanathan, vice president and principal analyst, Aberdeen. "Traditional approaches of solely focusing on being demand-driven from a demand-planning perspective are not adequate. Companies need to balance demand planning with short-term responsive strategies."

To identify top-performing companies in demand management, Aberdeen looked to four key measures: forecast accuracy at the product family level; forecast accuracy at the SKU level; cash conversion cycle; and customer service levels. Top-performing companies are able to achieve markedly better performance across these measures, which have a significant impact on business results.

Between those top-performing enterprises and their peers, there are some notable differences in the tools they use for demand management. Specifically, high-performing companies are 1.6 times more likely to use a "best of breed" solution, and are 30 percent less likely to use spreadsheets to solve demand-management problems. "In leveraging demand-management technologies, top performers are focusing on leveraging the tools beyond out-of-the-box statistical forecasting and doing external collaboration, allocation of forecasts to lower levels, and customer level forecasting for improving customer service levels," notes Viswanathan. Beyond technology adoption, top performers are also more likely than their peers to create a single demand forecast with inputs from multiple roles in the company, as well as to have the ability to include promotions and other demand-shaping activity into demand forecasts.

Read Full Article