Maria Lazaro, Anna Viegas , Mar Fernandez
We can define the demand planning as the set of actions and calculation techniques needed to supply a product (stock) to one or more consolidation or storage centers, and whose main objective is to maintain adequate stock levels to meet the average demand requested by the customer set in a period of time. The objective is to maintain a balance between demand and supply. The set of actions mentioned before refer to actions of an administrative and technological type.
Once we have a brew definition of demand planning, we are going to see what is its role inside logistics. For that, we are going to explain it in different points:
- Represents an idea of centrality: we can see the demand planning as the motor of the supply chain. Once we have generated the planification output, all the activities related with the supply chain start. For example, when we send the output of purchase or production, our suppliers and manufacturers start their activities of production or product shopping; then, all the activities related with transport and provisioning take place; and when the product arrives to our warehouses, our inventories are modified and we can supply our product to the customers.
- Is the main activity in the logistics of a company: in some cases we can see that some companies have decided to externalize some activities to Logistic Operators like storage, transport, handling…, whereas other activities such as provisioning (demand planning) and customer service are managed directly by the company itself. This shows us the importance of the demand planning in business logistics.
- There must be a perfect connection between planning and inventory. It is not possible to maintain a correct number of stocks if it does not correctly carry out the planning process, and it is also very important that there is a continuous exchange of communication between both. Most of stock problems are caused by bad planning: uncertain lead time high security stock, non-segmentation of different products…
- Developing area: There are still many companies that are unaware of the benefits of demand planning in logistics, and that’s why they have used insufficient or inadequate human and technological resources. Nowadays we need to explore in greater depth to be able to manage more efficiently and thus be able to render more. After explaining why demand planning is important inside the logistics of a company, we would like to share with you two examples about demand planning of big companies: Disney and Dell.
Disney World
Disney is a big company that offers a large product portfolio, from films, games, shows, even stays in their hotels, and the opportunity to live an unforgettable experience in the theme parks, from Orlando and Paris. Due to the large portfolio of products Disney have to perform an effective demand management, for such to satisfy the needs and expectations of the clients, and get their loyalty. In order to get an effective demand management this company carry out several studies about the activities that can influence in the consumers, like the time that a client have to wait in a queue to climb an attraction, and they propose several alternatives, in order to ensure that the client doesn’t become nervous, and decides to leave the queue. Some of the proposals to improve this process are amuse consumers with cartoons, videos, mirrors, and laying out their lines like a snake, because in this way the client have the feeling of constant progress.
Also, Disney has a great technological equipment, like digital cameras, that allows them to detect waiting problems and implement measures in real time. If the equipment observes that people have to wait a lot of time, they increase the capacity of the draws, or send a character of Disney to entertain children and adults. Another tool that they use is the implementation of screen TVs in order to report to the consumers about the attractions that have more time of waiting, and those that less, and in this way long queues aren’t formed, or perform mini-parades to attract the curiosity of the customers, and balance the capacity. Disney managers have carried out an extensive research, with a creative vision and a right technology to develop, deploy and perfect measures like these. Thanks to the improvement of this process, have achieved the main objective of maximizing customer enjoyment, and have increased the rides per visitor.
DELL
Dell is a large multinational computer technology company with a wide number of different products. Dell is well known for its innovations in supply chain management and e-commerce.
In Dell’s case, the company focused on reinforcing customers’ loyalty, in order to know in depth what were the shortages of their products and to be able to solve them with exactitude and with a more personalized treatment to all those problems that could appear. Indeed, those new focuses made this brand be considered as high quality company.
On the other hand, one of the most important factors was to know how to detect what would be the most demanded so it could be covered in the fastest and most efficient way. In order to achieve this purpose, Dell established periodic, monthly and weekly meetings with its clients as well as a series of regular surveys. This great interaction between the company and its customers, caused the company to change the prices of its products based on the stock, supply and demand.
These demand management techniques made it possible to manage the demand and supply more efficiently, dynamically and in real time.
References:
● https://meetlogistics.com/demand-planning/planificación-de-la-demanda-fundamento
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● https://meetlogistics.com/demand-planning/planificar-la-demanda
● http://islandsofprofitbook.com/2011/01/10/demand-management-disney-style
Business Logistics 