Create a consensus demand plan in ibp

How to incorporate Sales and Marketing


Preben Holst Nielsen

In IBP you can create key figures that are editable and open for input by Sales and Marketing. By using the key figure calculation, you can build up a logic that fits into your demand planning process. This ensures that Sales and Marketing can provide important input to the consensus demand plan and be more proactive instead of only relying on your statistical forecast.

Statistical forecast models are based on historical data

Statistical forecast models are only based on historical data and might not always represent the expected future demand.

In IBP you can use various forecast models to create a statistical forecast. But sometimes we need input from Sales and/or Marketing to better predict the expected demand. To capture these inputs, we use key figures dedicated to Sales and to Marketing. This is done to keep track of your statistical forecast and be able to do forecast accuracy calculations on both our statistical forecast and our total consensus demand plan.

Input can be given at a detailed level or an aggregated level

When creating a key figure, you define at what level it is stored. This is the base planning level of the key figure. This is a vital part when you define the key figure as this puts a lower bound on what level you can provide input. For Marketing it could be relevant to provide input per location, product and customer in weekly volumes. Hence, this base planning level should be based on these dimensions.

When configuring key figures in IBP, you can define how the key figure should aggregate and disaggregate

Input can also be provided at an aggregated level, for example, by product family and location. Since data are stored at base planning level, a disaggregation mode must be defined. This ensures that data can be given at an aggregated level, but stored at a detailed level.

When evaluating a key figure at an aggregated level, an aggregation mode should also be defined. This is defined in both the settings and in the actual key figure calculation.

Flexible key figures

Key figures are very flexible, which is a gift to the business, but must be supported by a well-defined planning process.

Since key figures can get input and be evaluated at different levels, it is important to have the right business process to support the inputs and evaluations. In the short horizon, it might be useful to provide information at a detailed level, because Sales or Marketing has this information. But looking a few months ahead, is it easy to be trapped in planning in detail but with high uncertainty. If you are planning at a detailed level far out in the time horizon, you will get trapped in the suicide quadrant that does not add value. Some months into the future, it will be easier to give input on, for example, a product family level if it is aligned with the decision level.

Understanding the business process and what level of detail is needed in different planning horizons is essential before building a planning tool. You should always bear this in mind when designing the solution. The flexibility of key figures in IBP is a gift for the business, but without a solid process it is easy to get trapped in the details that do not add value.

Hence, in IBP it is easy to create editable key figures that enable input from Sales and Marketing that allows for both aggregated and detailed planning.