Guest Author: Seth Burkhart, Director, Supply Chain Planning at enVista
Collaborative demand planning integrates insights from sales, operations, marketing and the supply chain to build accurate and actionable forecasts. This complex discipline requires careful use of technology to bring different departments, such as sales and finance, into alignment. Bridging the gap between the disparate goals of growing revenue and managing costs requires both cultural alignment and the right technology support.
Collaboration is critical to any organisation taking its business to the next level. Typically, companies start with a core competency, and as they grow, they add supporting functions, new departments or shared services. It’s common for the company culture and strategy to lag in this evolution, creating challenges for growing organisations.
The Role of Sales and Operating Planning (S&OP)
S&OP connects demand planning to your broader business strategy. It plays an important role in laying the foundation for collaborative demand planning. By bringing sales forecasts, marketing campaigns and supply chain capacity into one conversation, it creates a unified view of demand.
When you embed demand planning in S&OP, it removes data silos and helps guide procurement, inventory and production decisions. Organisations typically turn to sales and operations planning to improve communication and collaboration with other teams, such as sales and demand planning.
Seeking input from people with different backgrounds and priorities leads to strong discussion and better decision-making, supporting overall organisational goals. But when things go wrong, differing priorities can drive a wedge between teams, increasing siloed decision-making.
Common Challenges in Sales and Demand Planning Collaboration
One of the most common challenges faced is misalignment between sales and demand planning. It can cause the collaboration to fail before it’s even started. Some common causes of conflict include:
- Differing goals, priorities and incentives. Sales teams are often focused on meeting or exceeding sales targets and maximising revenue, while demand planners prioritise accurate forecasting and efficient inventory management. These differing goals can lead to conflicts in decision-making and resource allocation. Additionally, the performance incentives companies have in place often lead to varying priorities among teams that need to work together.
- Communication barriers. It’s no secret that teams across organisations “speak different languages.” Whether it’s revenue vs. volume or speaking in days or weeks vs. quarters and years, these differences can lead to confusion and misunderstandings. Effective collaboration requires open and clear communication between sales and demand planning teams.
- Resistance to change. Implementing collaborative processes, such as S&OP, may require changes to existing workflows or responsibilities. Resistance to change from either team can impede collaboration efforts.
- Different ways of working. A lack of understanding of one another’s processes and the challenges each department faces can contribute to less-than-desirable collaboration between teams.
- Limited data accuracy and availability. Sales teams may not always have access to detailed historical data or insights into underlying demand drivers. This can lead to challenges in providing accurate forecasts to demand planners, who rely heavily on data for their planning activities.
- Short-term vs. long-term focus. Sales teams often have a short-term focus, aiming to close immediate deals and meet quarterly targets. In contrast, demand planners need to take a longer-term view to develop accurate forecasts and strategic inventory plans.
- Lack of trust or alignment. Building trust and alignment between sales and demand planning teams is crucial for successful collaboration. If there’s a history of conflicting priorities or a perceived lack of support from one team to another, it can hinder collaboration efforts.
- Complexity of demand drivers. Understanding and predicting demand can be complex, especially in industries with volatile market conditions or rapidly changing consumer preferences. This can make it challenging to develop accurate forecasts that satisfy both sales and demand planning requirements.
- Organisational silos. In some organisations, functional silos can impede cross-functional collaboration. If sales and demand planning operate independently without adequate integration or alignment with broader business objectives, collaboration becomes more difficult.
Benefits of Collaborative Demand Planning
Effective collaborative demand planning leads to more accurate forecasts, reduced stockouts and better alignment between revenue goals and supply chain execution. By bringing sales and planning into alignment, an organisation can respond more quickly to changing market conditions, translating sales and inventory data into operational adjustments in near real time. For example, retailers can align promotions with inventory availability, avoiding both overstock and missed sales opportunities.
Best Practices for Enabling Collaboration
Creating the right cultural and technical environment for collaboration is essential. Consider the following when implementing collaborative demand planning:
- Establish clear governance. Define clear roles to create understanding and accountability between sales, marketing and supply chain teams.
- Leverage integrated technology. Choose collaborative demand planning tools that offer seamless integration between the existing ERP and CRM systems.
- Create a shared forecasting language. Avoid misunderstandings by standardising metrics (e.g., units vs. revenue) and terminology.
- Invest in continuous training. Offer training to help all stakeholders understand the metrics and take full advantage of them. Training is also invaluable as a change management tool, as it helps reduce pushback from staff members.
The Role of Technology and Tools
Today’s demand planning software eliminates silos by connecting real-time sales, marketing and operations data. AI-powered tools can detect demand shifts early and suggest adjustments to forecasts.
Integration with ERP and WMS systems (via APIs, third-party connectors or direct integration) ensures that once forecasts are set, supply chain execution aligns seamlessly. Seamless integration and strong visibility should be a priority when choosing a demand planning suite.
Building Collaborative Demand Planning Into S&OP
Collaborative demand planning resolves friction between sales and planners while simultaneously building a resilient supply chain that can quickly adapt to changes in the market. By aligning through S&OP, adopting shared metrics and leveraging modern integrated demand planning tools with AI features, businesses can create more reliable forecasts and build stronger cross-functional relationships.
The key isn’t to combine the two functions, it’s to collaborate through education and an increased awareness of the unique value of each team. When each team understands what the other provides, they’re better positioned to work together within the larger process.
Change management can be a challenge. At enVista, our team of industry experts has more than two decades of experience building strategies that help organisations break down barriers, build new collaborative habits and redefine the sales and planning processes with a focus on consensus and alignment. Contact us today to learn more.
