The Demand Planner: Quarterback for the Planning Team
The Demand Planner is truly the ‘wide angle lens’ for the planning process. Similar to a quarterback who has the best view of the field during play, the demand planner has the broad perspective on both historical trends and sales expectations. Armed with this knowledge, he/she is best positioned to make planning decisions that affect product availability and inventory management.
Primary Job Functions of the Demand Planner
Consolidate Sales Pipeline
This role owns the task of consolidating the product-level forecasts from the sales team. Typically, the sales team will document their customer pipeline in a customer relationship management tool, such as Salesforce.com. The customer pipeline is classified into the stage of the selling process, from sales prospects to proposal and through deal closure.
It is the function of the demand planner to consolidate this sales pipeline into a meaningful forecast of product demand, and prepare summary views easily understood by executives.
Review Historical Sales by Product
The demand planner also compares the sales pipeline with historical sales as a test of reasonableness. Does the sales pipeline yield a dramatically different order pattern versus history? Is there a historical seasonal pattern to be mindful of when developing the next demand plan?
In some businesses in which recurring orders comprise a large portion of the business, it is likely the sales pipeline only includes data for new wins, and not existing/recurring orders. In this case, it is the role of the demand planner to estimate recurring orders based on historical data and other known factors. Ideally, he/she uses a statistical tool, such as Minitab, to create a regression analysis to predict future demand. Some demand forecast software also includes a robust statistical engine as part of the software package. In either case, this role should be comfortable with using basic statistical methods to analyze historical product demand.
Marketing Input: Macro Trends and Product Portfolio
The marketing team can help the demand planner understand the key industry drivers for the business. As example, they may provide general industry growth rates to incorporate into the long-term demand forecast.
Marketers also may give input on specific product lines. Their market research may reveal a specific product feature is gaining market acceptance. They may suggest that upcoming demand forecasts include this impact.
Finally, the marketing team provides critical information about the product portfolio. They know which products are likely to be retired from the product portfolio, and which will be introduced or modified. This information is critical to development of a reliable demand plan, as it’s necessary to include only the current product portfolio in the product-level forecast.
Collaboration With Business Leaders
It’s critical the business leaders are included in the planning process. At a minimum, the general manager and controller should be given an opportunity to provide their input into the demand forecast.
The general manager benefits from seeing how the product-level forecast is aligned with the strategic direction of the business. He/she recognizes the historical investments made to support various product lines. They will want to know whether these investments are paying off. Remember, the demand planner has the earliest visibility into the product forecast. This is an opportunity to keep the general manager in the loop on product growth.
The business controller will be interested in the profitability of the products being made. For instance, if the forecast may reveal a trend towards lower or higher margin products. This is crucial information for developing the forecast for the business. Second, the controller needs to see the investments being made to build inventory. Since inventory is a key component of working capital, an effective controller will ensure the business has sufficient cash to build inventory.
Putting It All Together: The Demand Plan
Armed with both a future perspective from the sales team and a historical view of product sales, the demand planner now can assemble the demand plan. The plan typically details expected demand for each product variant for the upcoming 12-18 months. Clearly, the demand planner will have a more accurate view for the very near term, while the long-term view will reveal long-term trends.
Depending on the size of the business and number of products in its portfolio, the demand planner may either build the demand plan on a spreadsheet, or he/she may utilize a software solution. In a small business (under $10 million in annual revenue), product demand is likely driven by a small number of customers and is easily managed in an Excel workbook. However, for much larger businesses, the demand planner benefits from a software solution that utilizes statistics to identify historical order patterns.
Most businesses refresh their demand plan on a monthly cadence. Each month the planner will compare actual results against the demand plan for that month, and identify causes for inaccuracy in the prior month’s plan.
Required Skills for This Role
Successful planners are typically highly analytical and enjoy drawing key conclusions from large sets of data. Frequently, this role has a background in statistics or math, and is comfortable using statistical tools to draw conclusions.
Remember, this role will be interpreting product-level forecasts in both history and future – This represents a lot of numbers to most people, so they should be comfortable working with this level of detailed data.
The demand planner role should be filled with someone who is is a good communicator. The planner is generally in charge of facilitating planning meetings between the sales leaders, business leaders, and plant personnel. As the intersection of these functions, he/she should be comfortable leading meetings and driving productive dialogue.
Many employers don’t recognize the need for a good communicator in the demand planner role. Due to the job demands for managing large amounts of data, hiring managers are frequently looking for strong analytical skill. They overlook the need to fill the role with an employee who can effectively communicate with business leaders.
Demand Planner Career Path
High Potential for Promotion
This role operates at the intersection of the sales team, business leaders, and plant personnel. For this reason, this role can be a high-visibility role with relationships in key elements of the business. If the planner proves they are capable as a collaborator and influencer among the business teams, then they will likely be sought after for leadership roles in either the business or supply chain.
Large Number of Job Openings
This role is in high demand, as businesses have learned that effective planning is an effective tool to reduce inventory. For this reason, businesses are hiring for this position. As of writing of this article, Indeed.com revealed over 7,000 active job postings for this role in the United States. For those with experience in statistics, this represents a wonderful career opportunity.
Demand Planner Salary
According to Indeed.com, the average annual salary for a demand planner is $71,900. The other major job sites, such as Payscale.com, Glass Door, and LinkedIn, reveal an average salary between $69,500 and $71,300.
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As with most occupations, the salary potential increases with the size and complexity of the role. At the time of this writing, Apple had an open job posting with expected salary of $125,000. Thus, this can be a lucrative career option for those that enjoy data analytics and forecasting.
How to Get Started in This Career
As with most careers in finance, you need a college degree to be considered for this role. Ideally, you would possess a degree in business, economics, or statistics, as all of these provide direct foundational knowledge for a planning role. However, even a less relevant degree (think communications, or even psychology) could be applicable.
Regardless of your degree, you really need to demonstrate critical thinking skills, and an ability to facilitate productive discussions among different stakeholders. An ideal job applicant is able to position their education as a way to make them uniquely qualified for the role.
The Institute of Business Forecasting & Planning (IBF) is a great resource for learning more about pursuing a career in demand planning. With over 40,000 members, the IBF publishes relevant articles on the topic of planning, and facilitates numerous conferences to foster collaboration among the planning community. A one-year membership costs $250, but I believe the IBF may offer student discounts.
The IBF also offers a career certification (the “Certified Professional Forecaster” or “CPF”). This certification would be a great way to demonstrate knowledge to prospective employers, and would set you apart from other candidates in the planning discipline. As of the time of this article, approximately 2,500 professionals achieved the CPF designation. This is relatively modest when compared to the size of the finance profession. Thus, for those interested in joining the planning discipline, the CPF designation could be an elegant way to distinguish yourself from other job seekers.
Wrapping it Up
In summary, the demand planner is a critical link between the business and the supply chain. He/she is responsible for translating the sales pipeline into a reliable demand forecast. They use historical trends to validate the forecast, and include input from key business partners prior to finalizing the demand forecast.
This role is highly analytical, but also requires someone who is able to foster collaboration within the business. For this reason, a successful demand planner is adept at managing large amounts of data, but is also able to develop effective executive summaries to describe the broad themes evident in a product-specific forecast.