The APQC Blog

5 Tips for Better Demand Planning

If you were on social media in 2013, you probably saw one viral video that was hard to miss: A Volvo Live Test featuring Jean-Claude Van Damme performing an “epic split” between two rolling Volvo trucks. It was the sixth and final in Volvo’s series of Live Test films, which pushed the boundaries of advertising in the social media age.

Over a two-year period, Volvo Trucks’ Live Test films on YouTube generated more than 100 million views and 8 million shares, and earned 20,000 media hits. The campaign was wildly successful by every measure, driving a 31 percent spike in demand among drivers and business owners who decided their next trucks needed to be Volvos.

This kind of well-timed spike in demand is what all business leaders dream of. But when the inventory isn’t there to meet that spike, the dream can quickly turn into a nightmare.

Volvo’s Live Test ad campaign illustrates how closely demand planning is tied to sales and operations planning, including marketing. In the past, predicting demand was a relatively simple matter of looking at past demand or your traditional sales channels. But today, demand planning is a whole new ball game, with online marketing and social media allowing customers to interact with and talk about you and your products in immediate ways that may increase or decrease demand.

Meeting demand often requires lead time (e.g., manufacturing components may need to be shipped across the ocean before assembly stateside), so organizations must endlessly chase information about demand-influencing factors to keep a few steps ahead of the game. An efficient—and relatively low-cost—demand planning process is essential.

 Demand/Supply Planning Costs

5 Tips for Better Demand Planning

From APQC benchmarking data, we’ve identified these 5 practices used by top performing organizations that you can apply to optimize your demand planning processes:

1. Standardize your supply chain.

An enterprise-wide system or policy to standardize your supply chain planning will enable you to streamline processes to take less time and require fewer personnel.

2. Leverage new technologies.  

Demand planning software tools can help improve your forecast accuracy by integrating cross-functional input from sales, finance, supply chain, and marketing. With real-time demand data and alert notifications, you can adjust your supply chain as needed.

3. Stay attuned to initiatives outside sales too.

Marketing and creative activities, colleagues, suppliers, and customers can play a critical role in driving demand. If there’s an upcoming heavy-hitting social media campaign or sales promotion, your demand planners need to know about it.

4. Collaborate with your customers.

By involving customers in your supply chain planning, you can more accurately determine how much product to manufacture and maintain in inventory, helping to reduce inventory carrying costs and improve the cash-to-cash cycle



5. Collaborate with your suppliers.

Your suppliers can provide valuable insights, from determining short- or long-term requirements for particular products and developing forecasts to providing key information about supplier inventory levels and capaciti


To learn more about how top performing organizations are optimizing their demand planning processes, see our APQC benchmarking data or read our APQC article on customer collaboration in supply chain planning.

Feel free to connect with me on Twitter: @MB_APQC or via Linked In.