Customer demand planning (CDP) is a business planning process that allows 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 business or firm performs in order to deliver goods and services of Value (economics), value to an end customer. The concept comes from the field of business management and was first described ...
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 Goal, objective to do something. It is commonly understood as a modal logic, temporal set (mathematics), set of intended actions through wh ...
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 system
A software system is a system of intercommunicating software component, components based on software forming part of a computer system (a combination of Computer hardware, hardware and software). It "consists of a number of separate Computer progr ...
s that are designed to forecast demand and plan operations. To test the added value of implementing this bottom-up approach, applications are providing simulation 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 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 implies CPFR type collaboration.
Aspects 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 with what actually happens. For example, a company might Estimation, estimate their revenue in the next year, then compare it against the ...
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Inventory control
References
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Business planning