Customer demand planning (CDP) is a business-planning process that enables sales teams to develop demand forecasts as input to service-planning processes, production, inventory planning and revenue planning.
Definition
CDP is an aspect of managing
value chain
A value chain is a progression of activities that a firm operating in a specific industry performs in order to deliver a valuable product (i.e., good and/or service) to the end customer. The concept comes through business management and was fir ...
s. Generally, the first step of CDP is to
forecast product demand. A manager can
plan
A plan is typically any diagram or list of steps with details of timing and resources, used to achieve an objective to do something. It is commonly understood as a temporal set of intended actions through which one expects to achieve a goal.
...
resource deployment in accordance with the resulting forecasts. It's a bottom-up approach vs. top down planning. Associated risks with this method are: Low forecast accuracy and numbers of planners required. There are various
software systems that are designed to forecast demand and plan operations. To test the added value of implementing bottom-up approach, applications are providing simulations functionalities to estimate the resulting demand forecast accuracy (e.g. POS sales ; sales invoices ; shipments, etc.)
In the manufacturer to retailer model, customer
collaborative partnerships
Collaborative partnerships are agreements and actions made by consenting organizations to share resources to accomplish a mutual goal. Collaborative partnerships rely on participation by at least two parties who agree to share resources, such as ...
have become more common since the 1990s. Although there was industry support behind CPFR (Collaborative Planning, Forecasting and Replenishment), manufacturers and retailers are adopting different versions of collaborative forecasting and replenishment strategies. These include collaborative-VMI, CPFR, account based forecasting, CMI, shared single forecast and replenishment etc.
Discovering markets
The challenges and complexities faced by the retailer are somewhat different from the challenges faced by suppliers (manufacturers and distributors). The demand management technology for the merchant is somewhat different from that of the brand or manufacturer on the supply-side.
Customer demand planning aims at matching customer supply planning logic and imply CPFR type collaboration.
Areas components of demand management include customer experience, demand creation, inventory and pricing optimization, channel management, sourcing, transportation optimization and advanced practices in technology.
See also
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Demand management
Demand management is a planning methodology used to forecast, plan for and manage the demand for products and services. This can be at macro-levels as in economics and at micro-levels within individual organizations. For example, at macro-leve ...
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Forecasting
Forecasting is the process of making predictions based on past and present data. Later these can be compared (resolved) against what happens. For example, a company might estimate their revenue in the next year, then compare it against the actual ...
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Inventory control
Inventory control or stock control can be broadly defined as "the activity of checking a shop's stock". It is the process of ensuring that the right amount of supply is available within a business. However, a more focused definition takes into acco ...
References
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Business planning