Theories come easy. Robust models that work in the real world do not. – Mark Payne, Fahrenheit 212
Recently I was asked by a client to describe myself in one sentence. After pondering it, the client smiled when I answered:
“I’m equal part genius, equal part buffoon”.
And I really believe that – at least the buffoon part.
I’ve never been able to dance very well with conventional wisdom. For some unknown reason, I can’t seem to follow along. I’ve always had a healthy dose of skepticism for conventional wisdom – especially in supply chain planning.
Recently a client of mine challenged me on the conventional wisdom regarding demand planning collaboration. First off, a bit of background about my client – let’s call him Ken.
When it comes to demand planning collaboration, Ken has a significant advantage over me.
He has no experience.
However, he does know retail. Cold. Ken is a smart dude and a quick study. He understands Flowcasting and its potential.
When we were talking and designing the demand planning process that will drive Flowcasting, the topic of collaboration came up. I did what any consultant would do and immediately offered Ken a large glass of Collaboration Kool-Aid.
After all, the conventional wisdom from every planning expert is that when it comes to demand planning, collaboration is king. Luckily Ken’s got a little buffoon in him too and he started to ask some pretty specific questions – questions that I’ve been pondering as well.
He pointed out that in a Flowcasting world, there is only one forecast – a time-phased forecast of sales to the consumer, by item, by store.
By his thinking a retail demand planner would be accountable for this forecast. And, of course, Flowcasting technology would generate the math forecast for possibly millions of store/item combinations. By his logic no collaboration would be necessary. I agreed.
But what about promotions and new items, I argued? Surely collaboration would be needed there and would improve the forecast. After all, it’s conventional wisdom. Then he floored me with the following, regarding demand planning collaboration:
- Outline the specific steps each person would perform in the demand planning process
- Prove that more people improve the process enough to warrant the extra effort
It was a difficult exercise and we both struggled to document, on a white board, actual steps different people would take that we believed would actually improve the process and resulting forecast.
After all, in a Flowcasting world, we are forecasting consumer demand. When it comes to promotions, a demand planner would use history to help predict demand. But, argued Ken, so would anyone else involved in the process (like a category leader or even a supplier).
And would their actual forecast really differ significantly from that of the demand planner, if they were unbiased and just trying to predict the sales? And, would their steps to arrive at the forecast be much different? If so, what would the steps be? I struggled. Started to babble. Then started to sweat. I couldn’t really come up with any significant difference. And you know what they say…”if 2 people in business always agree, then one of them is not necessary”.
After more debate, we ended up in the same place even for new items.
Our conclusion was completely the opposite of conventional wisdom – A single demand planner, accountable for the forecast, would produce as good a forecast as a team collaborating on it, with considerably less effort and a much simpler process.
If the demand planner wanted advice or input on a specific forecast, they would ask (possibly a category manager). But, we both agreed – that would happen very rarely. In terms of proving that having people collaborate on the forecast produces a better consumer demand forecast, there really is no documented proof. Only conventional wisdom, supported by an army of Kool-Aid drinkers.
Now I know what my long time colleagues and fellow self-anointed supply chain experts are thinking – wow, Ken really is a buffoon.
By the way, I happen to agree with him.
Guess that makes me a buffoon as well.
Told you so.