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How to integrate new product project plans into the demand plan
9 February 2017
One of our recent surveys revealed that 37% of companies aren’t integrating new product development into their demand plans. This is a concerning figure considering the demand plan is the official forecast of the company and it’s accuracy depends on tight integration between product and demand. Without it to effective decision making is compromised.
In a webinar broadcast by Oliver Wight partner, Jerry Shanahan and principal, Timm Reiher on 4th January 2017, business leaders heard how new product plans should be communicated to the rest of the organisation through the Integrated Business Planning (IBP) process - so they don’t come as a surprise to anyone!
All well and good but understanding when to include new products into the Demand Plan can be difficult since there is often limited information available. This leads to a situation whereby project plans are in place but have not been accounted for in the overall forecast. In which case, any gap between, the top-down plan and bottom-up forecast gap visible through the IBP process is not accurate and this leads to flawed decision making, undermining the capability of the IBP process itself.
So how do we include projects into the plan when there is such limited information? The answer is to make assumptions and use these assumptions to make estimations. This said, it is essential the assumptions are based on demonstrated performance to ensure the resultant plans are realistic. This might sound ambiguous but using estimations is OK as long as the assumptions behind them are a) communicated to the organisation and are within the IBP Product Management Review (PMR) and b) they gain consensus.
Since the PMR is the first step in the IBP process, it is a vitally important one. This is because the other steps that follow all depend on it – Demand, Supply, Integrated Reconciliation and finally the Management Business Review. Naturally then the entire planning process falls at the first hurdle if the inputs to the PMR are inaccurate or incomplete.
Don’t leave the Demand team to second guess otherwise you lose the opportunity of having one set of numbers and one aligned plan, without which your entire forecast becomes little more than guesswork.
You can watch Timm and Jerry’s webinar and hear more here. They have also just released a white paper on the subject, visit our website to download your free copy.