Integrated Product Portfolio and Project Management: “The Art of New Product Demand Planning”

New Product Portfolio and Project Management can be one of the most challenging components to implement in the Integrated Business Planning (IBP) process model. On the surface, the concepts are fairly straightforward and integrated with a company’s strategic plan in a way that is easy to understand. Actually implementing these concepts, and more importantly sustaining them, is the real challenge.

It is very easy to get bogged down into the details. A key concept behind IBP-designed Product and Portfolio Management is to make decisions about the future, instead of the present. But the further out we look, the more ambiguous projects become and less certain are the details. Managing a long-range plan, however, is key to success. Real and tangible value is realised when we connect our decisions to the Demand Plan (the official forecast of the company) from which we plan the future. (See “Demand Plan vs. Forecast” and “Best Practice” below.)

Decisions are essential for Product and Portfolio Management as, through a formal Stage and Gate process, we may put projects on hold, make them rework the previous stage, cancel projects, and introduce new ones; there is a long-term consequence and/or upside connected to planned revenue and production capabilities. Without tying this understanding into the Demand Plan, we miss a major opportunity to plan strategically and lose a very visible benefit to all the work that builds each month into the PMR (Product Management Review) as part of IBP. When mastered, it can provide a game-changing advantage over your competitors.

Companies that utilise best practices incorporate evaluation of short- and long-term consequences in their formal Stage and Gate product development process. An output of these decisions needs to be communication to the other functional areas of the business, including demand planning, sales and marketing, supply, and finance. This communication becomes seamless when it is incorporated into a company’s IBP process.

When long-range plans and decisions are not tied into the demand planning process as part of IBP, needless crises and under-performance can be created. What is missing is the ability to assess major opportunities and changes, plan strategically, and gain visibility across all company functions – demand, sales, marketing, operations, finance, and even portfolio and product management.

We find that few companies do this well. As a result, those companies that do, gain game-changing advantages over their competitors. In this white paper, we will review what it takes to develop mastery in integrating Product Portfolio and Project Management as part of an IBP process.

Demand Plan vs Forecast

Definition of Demand: What a customer needs, when and where they need it

Forecast connotes a lack of control – something that cannot be predicted with a high degree of accuracy

Plan denotes actions planned in advance, which means someone is determining – and controlling – actions taken

Attitude that forecasting is like predicting the weather causes lack of accountability.

Best Practice: The process is not forecasting, it’s planning. Combine the definition of demand with the concept of planning instead of forecasting, and we have a Demand Plan. We encourage our clients to refrain from describing this process as “forecasting” as it reinforces the perception that we have no control over our future. The official forecast that the business is executing to should always be referred to as the “Demand Plan.”