Assessment Tool for the Demand Management Process

General Information This assessment tool is designed to identify opportunities in your organization’s demand management process. It highlights important aspects

of the strategic and operational sub-processes within demand management. Management can use this tool to identify process strengths and weaknesses, and then focus their efforts on those areas where improvement efforts will drive most benefits.

Directions A cross-functional management team should complete each item in the assessment, the score, the importance, and the justification. Score: The score for the item is assessed on a 5-point scale. 1 = you agree with the statement written in column 1. 2 = you believe the organization is somewhere between the statements in columns 1 and 3. 3 = you agree with the statement written in column 3. 4 = you believe the organization is somewhere between the statements in columns 3 and 5. 5 = you agree with the statement written in column 5.

The scale includes descriptions for 1, 3, and 5. Intermediate columns are included to accommodate ratings that fall between the scale points. Check the box corresponding to the score of the item. If the respondent is not sure how to score the item, check the “Don’t Know” box.

Importance: The importance of the item is assessed on a 3-point scale. 3 = Critical: Item is essential for the success of the demand management process within your organization. 2 = Important: Item is important but not essential for the success of the demand management process within your organization. 1 = Minor Importance: Item is of minor importance for the success of the demand management process within your organization.

Justification: Provide justification for your score and importance rating for each item in the space provided, i.e., why did you score the items the way you did?

Source: Douglas M. Lambert, Editor, Supply Chain Management: Processes, Partnerships, Performance, 2nd Edition, Sarasota, FL: Supply Chain Management Institute, 2006, pp. 257-268. For personal use only and not for commercial purposes.

©2006, Supply Chain Management Institute 1

 

 

Strategic Sub-Processes

S–1. Determine Demand Management Goals and Strategy Score

Item 1 2 3 4 5 Don’t Know Importance

a We do not understand our corporate strategy.

We have a good understanding of our corporate strategy, but have not determined how it affects our strategy for demand management.

We have a good understanding of our corporate strategy and how it affects our strategy for demand management.

Critical

Important

Minor Importance

Justification:

b We have not identified the bottlenecks.

We have identified the bottlenecks within the activities of our firm, but not the bottlenecks in the supply chain as a whole.

We have identified the bottlenecks in our supply chain.

Critical

Important

Minor Importance

Justification:

c Overall goals and priorities for the demand management process have been set by the planning organization within our firm.

Overall goals and priorities for the demand management process have been set with cross-functional involvement.

Overall goals and priorities for the demand management process have been set with cross-functional, and cross-firm involvement.

Critical

Important

Minor Importance

Justification:

©2006, Supply Chain Management Institute 2

 

 

S-2. Determine Forecasting Procedures Score Don’t

Item 1 2 3 4 5 Know Importance

a We do not develop formal forecasts for planning purposes.

We use forecasts for planning, but different functional areas in our firm use their own forecasts and there is no coordination.

Our forecasts are coordinated within the firm such that different functional areas are planning based on the same numbers.

Critical

Important

Minor Importance

Justification:

b We rely on a very limited amount of data for developing forecasts.

We use several sources of data for forecasting, but there is room for improvement.

We have evaluated the value of all potential sources of data and use them most appropriately for developing our forecasts.

Critical

Important

Minor Importance

Justification:

c We have not analyzed the appropriateness of VMI and CPFR.

We have analyzed the appropriateness of VMI and CPFR but we have not yet implemented them to their fullest potential.

We have analyzed the appropriateness of VMI and CPFR and implemented them to their fullest potential.

Critical

Important

Minor Importance

Justification:

d We use the same forecasting methods for all our products.

We choose forecasting methods based on product family.

We choose forecasting methods based on product segmentation (e.g. demand pattern, channel, uncertainty)

Critical

Important

Minor Importance

Justification:

©2006, Supply Chain Management Institute 3

 

 

S-2. Determine Forecasting Procedures (continued) Score Don’t

Item 1 2 3 4 5 Know Importance

e We do not re-evaluate our choice of forecasting methods.

We re-evaluate our choice of forecasting methods once problems arise.

We re-evaluate our choice of forecasting methods regularly.

Critical

Important

Minor Importance

Justification:

S-3. Plan Information Flow Score Don’t

Item 1 2 3 4 5 Know Importance

a We have not evaluated what additional data sources

We collect data from several sources and use it to develop

We know what sources of data are available, have evaluated the

Critical

Important

could improve our forecasts, but we have not value of each source, and know forecasting process. evaluated the value of each

source. how to get the data effectively. Minor

Importance

Justification:

b We have not designed an effective system for sharing forecast data with everyone who needs it.

We have evaluated who in the firm needs forecast information, and we have designed a system to share it effectively.

We have evaluated, both internally and externally, who needs forecast information, and we have designed a system to share it effectively.

Critical

Important

Minor Importance

Justification:

©2006, Supply Chain Management Institute 4

 

 

S-3. Plan Information Flow (continued) Score Don’t

Item 1 2 3 4 5 Know Importance

c We do not consider how forecast information can influence our business strategy.

Forecast information is used strategically within the function where the forecast is developed.

We understand how forecast information can influence our business strategy and share relevant information with key decision makers in the firm.

Critical

Important

Minor Importance

Justification:

S-4. Determine Synchronization Procedures Score Don’t

Item 1 2 3 4 5 Know Importance

a We do not have formal synchronization procedures in place to match supply with demand.

We have consistent synchronization procedures that involve cross-functional input and execution.

We have consistent synchronization procedures that are cross-functional and also include input from appropriate suppliers and/or customers.

Critical

Important

Minor Importance

Justification:

b We make allocation and stockpiling decisions without cross-functional input.

We make allocation and stockpiling decisions with cross- functional input but we don’t have firm policies in place.

We have policies in place about allocating and stockpiling inventory and we adhere to them.

Critical

Important

Minor Importance

Justification:

©2006, Supply Chain Management Institute 5

 

 

S-4. Determine Synchronization Procedures (continued) Score Don’t

Item 1 2 3 4 5 Know Importance

c Our management team does not have a clear understanding of the capacity and flexibility available.

Our management team has a clear understanding of the capacity and flexibility available within the firm, but not elsewhere in the supply chain.

Our management team has a clear understanding of the capacity and flexibility available at key points in the supply chain.

Critical

Important

Minor Importance

Justification:

d We use the same synchronization procedures

We informally differentiate synchronization procedures for

We formally differentiate synchronization procedures for

Critical

Important

for all our products. different products. different products. Minor Importance

Justification:

S-5. Develop Contingency Management System Score Don’t

Item 1 2 3 4 5 Know Importance

a

We react to events that cause an imbalance between supply and demand when they happen but it is usually time- consuming and is done with limited functional involvement.

We put together an ad-hoc cross functional team to deal with unforeseen events that cause an imbalance between supply and demand.

We work with a cross-functional team to proactively consider potential events that might cause an imbalance between supply and demand and we have an effective contingency management system for dealing with them.

Critical

Important

Minor Importance

Justification:

©2006, Supply Chain Management Institute 6

 

 

S-6. Develop Framework of Metrics Score Don’t

Item 1 2 3 4 5 Know Importance

a We do not have formal demand management metrics.

We have demand management metrics but we do not relate them to financial performance.

We have formal metrics focused on demand management and we understand how they impact our firm’s EVA.

Critical

Important

Minor Importance

Justification:

b We do not have formal performance goals for demand management.

We have formal performance goals relating to demand management that are communicated internally.

We have formal performance goals relating to demand management that are communicated throughout the firm and to key suppliers and customers.

Critical

Important

Minor Importance

Justification:

c Conflicting functional objectives often hinder the performance of the demand management process.

There are groups of functions whose metrics are aligned, but there are some conflicts between the groups.

Our demand management metrics are aligned with other metrics used throughout the firm.

Critical

Important

Minor Importance

Justification:

d People in our firm have a limited understanding of how their decisions and actions affect the demand management process.

People throughout our firm understand how their decisions and actions affect the demand management process.

People throughout our firm, as well as our key suppliers and customers understand how their decisions and actions affect the demand management process.

Critical

Important

Minor Importance

Justification:

©2006, Supply Chain Management Institute 7

 

 

Operational Sub-Processes

O-1. Collect Data / Information

Item 1 2 Score

3 4 5 Don’t Know Importance

a Collecting the data required for forecasting is time-consuming and there are frequent issues with the accuracy and timeliness of the data.

The data collection process is standardized, but we have occasional issues with the accuracy and timeliness of the data.

The data and information we collect from the required sources is consistently complete, accurate and timely.

Critical

Important

Minor Importance

Justification:

b We do not consider the impact of new products when forecasting.

We informally collect data and information regarding new products for forecasting.

We systematically collect data and information regarding new products for forecasting.

Critical

Important

Minor Importance

Justification:

c We do not consider the impact of returns when forecasting.

We informally collect data and information regarding returns to be used for forecasting.

We systematically collect data and information regarding returns to be used for forecasting.

Critical

Important

Minor Importance

Justification:

©2006, Supply Chain Management Institute 8

 

 

O-2. Forecast Score Don’t

Item 1 2 3 4 5 Know Importance

a There is a lot of variability in our forecast accuracy from period to period.

There is some variability in our forecast accuracy from period to period.

Our forecast accuracy is very consistent from period to period.

Critical

Important

Minor Importance

Justification:

b Our forecast accuracy is worsening over time.

Our forecast accuracy has remained stable over time.

Our forecast accuracy has been improving over time.

Critical

Important

Minor Importance

Justification:

c We do not track forecast errors.

We track forecast errors but we do not analyze them to help improve our forecast accuracy.

We track and analyze forecast errors and use that information to improve our forecast accuracy.

Critical

Important

Minor Importance

Justification:

d We have significant opportunities to improve our forecasting process.

We have limited opportunities to improve our forecasting process.

It would not be cost effective to try to improve our forecasting process any more.

Critical

Important

Minor Importance

Justification:

©2006, Supply Chain Management Institute 9

 

 

O-3. Synchronize Score Don’t

Item 1 2 3 4 5 Know Importance

a We have significant opportunities to improve our synchronization procedures.

We have limited opportunities to improve our synchronization procedures.

Our synchronization procedures are effective and balance risk with financial constraints.

Critical

Important

Minor Importance

Justification:

b We do not communicate our demand execution plan internally in an effective and efficient manner.

We communicate our demand execution plan internally, but we don’t share it with suppliers or customers.

We communicate our demand execution plan effectively and efficiently, both internally and with key suppliers and/or customers.

Critical

Important

Minor Importance

Justification:

c We do not calculate confidence intervals.

We calculate confidence intervals on our forecasts but only use them internally.

We calculate confidence intervals on our forecasts and share them with our suppliers.

Critical

Important

Minor Importance

Justification:

d We have not explored technologies that would aid with the synchronization process.

We use technology in the synchronization process but it is a standalone tool that is not integrated with other planning systems.

The technology we use in the synchronization process is integrated with our enterprise resource planning system.

Critical

Important

Minor Importance

Justification:

©2006, Supply Chain Management Institute 10

 

 

O-4. Reduce Variability and Increase Flexibility Score Don’t

Item 1 2 3 4 5 Know Importance

a We have not evaluated how our policies and sales practices add variability to demand.

We have made efforts to reduce controllable demand variability but more opportunities exist.

We have minimized the demand variability that we control internally.

Critical

Important

Minor Importance

Justification:

b We assume customer demand is an input that cannot be affected.

We believe there are opportunities to work with customers more closely to manage demand variability.

We work closely with our key customers to manage demand variability.

Critical

Important

Minor Importance

Justification:

c We experience considerable strain when we need to respond to unexpected changes to demand.

We believe there are opportunities to improve our internal ability to respond to demand.

We have developed an appropriate level of flexibility within our firm.

Critical

Important

Minor Importance

Justification:

d We have not worked with suppliers and customers to improve our flexibility to respond to unexpected changes in demand.

We have worked with key customers and suppliers to improve our flexibility but there are more opportunities to do so.

We have worked with suppliers and customers to develop an appropriate level of flexibility throughout the supply chain so that we can best meet demand.

Critical

Important

Minor Importance

Justification:

©2006, Supply Chain Management Institute 11

 

 

O-5. Measure Performance Score Don’t

Item 1 2 3 4 5 Know Importance

a We believe our competitors are better at demand management than we are.

We believe our demand management process is adequate.

We believe we do demand management better than our competitors and it is a competitive advantage for us.

Critical

Important

Minor Importance

Justification:

b

We do not communicate our demand management performance throughout the firm.

We communicate our demand management performance throughout the firm, but not with key customers and suppliers.

We communicate our demand management performance throughout the firm and with key customers and suppliers.

Critical

Important

Minor Importance

Justification:

c We do not reward customers and suppliers for helping us improve our demand management process.

We share benefits with customers and suppliers on an ad hoc basis.

We have an established structure for rewarding customers and suppliers that help us improve our demand management process.

Critical

Important

Minor Importance

Justification:

©2006, Supply Chain Management Institute 12