Panasonic reinvents demand planning to drive alignment
The work of demand planning managers has become incredibly complex in recent years as consumers became increasingly exacting and fickle, the path to reaching customers seemed less clear, and critical data about both a company’s customers and its supply chain grew trickier to gather. Traditional demand planning doesn’t work anymore, a fact that was magnified by the pandemic.
The forecast is not the whole story
The familiar approach of leveraging internal data provides only a limited view of marketplace behaviors and how the organization can address them. Poor internal alignment of demand planning with sales, operations, and finance, and equally weak external alignment with suppliers, customers, channel, and distribution partners cause routinely disjointed and uncoordinated forecasts. Governing the whole process places emphasis on the forecast itself and not the actions that the business needs to take.
A more connected and resilient demand planning process must reach deeper into the value chain and work from an unbroken influx of data from customers, the marketplace, supply chains, and within the organization. Leading demand management professionals must expand their perspective, seeking the story behind the forecast in order to discern the main drivers of buyers’ demand for their products and thus determine how best to align the organization’s resources to shape that demand.
The good news is that successful companies are adapting and getting demand planning right. Although each has their own unique formula, the one ingredient they have in common is using a planning solution that can readily span diverse data sources and connect with other applications, such as ERP, CRM, supply chain forecasting, and spreadsheets. A vivid example can be found in Panasonic North America, which has been particularly successful in applying such a solution to adapt nimbly to business conditions and customer demands.
Panasonic North America, meeting the future
Panasonic become a household name through a robust line of consumer electronics. Beginning in 2008, Panasonic shifted to becoming primarily a B2B electronics brand, with business customers now accounting for over 95% of its global revenue. If you’ve ever ordered a quick-service meal from a kiosk, enjoyed inflight movies or Wi-Fi, been immersed in the theater-like experience of a theme park ride, or used anything with a rechargeable battery, chances are that it was delivered by Panasonic.
Panasonic’s business products and solutions belong to a set of five major product lines, each operating as independent divisions and managing their own factories. Each division conducts its own planning processes, using its own methods for structuring and reporting data for the forecasting demand. Although such a situation presents a challenge for any business, the cumulative effects created the most obstacles.
“What if a customer wanted to order more than one of my products?”
Panasonic managed demand planning covering its five divisions, but it came at a heavy cost. All five divisions conducted monthly planning activities, each executed differently, often using slow, manual processes based on spreadsheets. “None of these processes were optimized,” said Manish Airen, Group Manager of Supply Chain Management at Panasonic, in a recent Anaplan webinar. Execution required significant institutional knowledge, which became unavailable when key personnel left the organization or went on leave, and took many months to replace.
Over time, resistance to changing planning processes increased out of fears that any change would impact everyone’s performance negatively, even as the entire industry was reinventing itself and forcing businesses to adapt. The day of reckoning came when Panasonic realized that it wasn’t prepared to deliver when customers wanted to order multiple Panasonic products from different divisions. “That should be a dream come true,” said Airen, “But I tell you, it was a nightmare. It was almost a completely manual effort to try to combine processes in order to show a customer that we are one company.”
The customer voice comes through loud and clear when you let the data speak
For Airen and his colleagues, finding themselves in the position of having to be careful what they wished for prompted some organizational soul searching. As Airen explained, “It all started with data for me. We started looking at the different data elements that were being generated through our processes. When you get an order from a customer, that’s a data point. When a customer has a special instruction or wants an additional service, that’s also a data point—and a revenue opportunity.”
The demand planning team quickly reoriented their thinking toward their customers, who had been giving Panasonic data about themselves all along, but this information was invisible to the demand planning team because they weren’t collecting and modeling that data. Further exploration revealed numerous instances of lost opportunities and revenue. Factories were hearing from customers that they were dissatisfied with standard lead times and were prepared to go to a competitor if Panasonic couldn’t start delivering products faster or more customized.
The future belongs to the flexible
It became clear to Airen and his team that they needed a data platform by which they could create a single data model that could cover all five divisions. As they were shopping around for possible solutions, they found that bringing in data feeds from their five divisions and keeping up with changes at the factory level could become prohibitively expensive in terms of systems integration, maintenance, and customization. “We realized that we needed something with a very flexible data model that we could change without creating a huge IT project.”
Airen found that Anaplan by far provided the most flexible data model by virtue of its ability to import data from and export data to multiple areas of the business and to customize models for different systems. Anaplan’s flexibility also provided Airen with a breakthrough benefit in his capacity as a supply chain manager. He shared, “I started looking at the supply chain capabilities and thinking, what if Anaplan could be my data hub as well as my supply chain tool?” Airen soon discovered that the same flexibility that existed within Anaplan’s data models also existed in the supply chain modeling section, which allowed him to create a custom model for each of the different divisions.
Airen was sold and the effects were almost immediate. Airen and his team were able to begin building models within weeks and reduce the time needed for forecasting by half. The time savings allowed Airen to reallocate sales staff to revenue-producing activities and to train dedicated model-building personnel within his department in a fraction of the time it would take to backfill previous vacancies in the role. Overall, having a business-owned solution resulted in lower fixed and variable costs in managing the demand planning process—all while enabling Panasonic to address customer demand challenges and turn data into revenue opportunities.