Power Query Basics for Supply and Demand Planners

Power Query Basics for Supply and Demand Planners

Demand planners are often inundated with data from numerous sources. In order to develop good forecasting models for a product or service, you have to understand both local and global trends, historical contexts, in addition to the standard in-house sales and finance data, of course.

Consequently, it’s recommended that you utilize Power Query, in order to import and manage data from both internal and external sources, when using Excel.

This data could be stored in different formats, for example you could have data in Access databases, in pdf files or comma-delimited files that you would like to import and manage in Excel.

In this tutorial, I will cover how to use Power Query to import the relevant data we need, from an Access database into Microsoft Excel. I will also go over a simple way, to transform the data we imported, in Power Query.

Power Query is a popular automation tool available in Microsoft Excel 2010 and other later versions of Excel.

The Data to Information Process

Part of a demand planner’s main role is to provide in-depth knowledge, on every aspect of the organization’s core performance indicators, to accurately predict customer demand for the service or product that the organization provides.

During the seminars I give, I often explain how this ties into the data to information process. Being a supply chain finance consultant, I have to take raw data and ultimately deliver insightful information about the demand for a product or service.

data to information process

So, in the next sections, we will focus on how we can use Power Query for Step 1 and Step 2 of the Data to Information Process.

You can read more about Forecasting and Planning in this post.

Importing Data from an Access Database Using Power Query

Microsoft Access is a relational desktop database application. Microsoft Access has the most scope in home and small business spheres, since it accommodates a limited amount of users and data requests.

Unlike SQL Server which is designed to handle thousands of users and many requests. In our source example, we have a folder that contains an Access database.

This database has the sales data of a hypothetical beverage company that sells coffee and tea. We have the annual sales data for the years: 2020, 2021 and 2022 stored in three different tables in the database.

importing database in access

So, to get the sales data for 2020, from the Access Database into Microsoft Excel, using Power Query follow these steps:

1. Open Microsoft Excel, create a blank workbook and select the Data Tab.

2. In the Get & Transform Data Group, select the Get Data option drop-down arrow.

clicking get data in access

3. Select From Database/From Microsoft Access Database.

selecting from microsoft access database

4. We will navigate to the folder containing our database and select Import.

importing database to access

5. In the Navigator Pane, select the Table called SalesData2020T.

selecting Table called SalesData2020T

6. Select the drop-arrow next to Load and then select Load.

select the drop-arrow

7. You should now see the table containing the sales data for 2020, imported into Excel.

table containing the sales data for 2020

Shaping the Data

So, now we will look at Step 2, of the Data to Information Process. In a real-world example, this could involve many different techniques including but not limited to trimming spaces, splitting columns, removing duplicates, creating custom columns, or spell-checking.

We can see in our dataset that we have the columns Units Sold and Unit Price. So, we want to create a Custom Column called Revenue using Power Query. This column will be the result of multiplying the Units Sold column by the Unit Price column.

Custom Column called Revenue using Power Query

To do this you will need to follow these steps:

1. Select any cell in the imported table, go to the Query Tab and then in the Edit Group, select Edit.

Select any cell in the imported table

2. You should now see the Table in the Power Query Editor.

Table in the Power Query Editor

3. Go to the Add Column Tab, and in the General Group, choose Custom Column.

Add Column Tab, and in the General Group

4. In the Custom Column Dialog Box, enter the name of the new column, which in this case is Revenue.

custom dialogue for revenue

5. Insert the Units Sold Column into the Custom column formula, section by clicking on it in the right-hand panel and then clicking Insert.

Units Sold Column into the Custom column formula

6. Now type the * Operator and then insert the Unit Price Column in the same way as we did above.

Operator and then insert the Unit Price Column

7. Click the Ok button to see the Revenue column added.

Ok button to see the Revenue column added

8. Now go to the Home Tab, and in the Close Group, click on the drop-down arrow next to Close & Load and select Close & Load.

Close & Load and select Close & Load

9. You should now see the table, with the custom column we created in the Power Query Editor, loaded in Excel.

Power Query Editor, loaded in Excel

Conclusion

In this tutorial, I went over how to use Power Query to import data from an Access database and how to create a custom column in the Power Query Editor.

It’s a good idea to leverage Power Query as much as possible, when you need to collate and organize data from different sources, in Excel.

Please let us know in the comments below, about your thoughts on Power Query and if you use this feature often.

A special thank you to Taryn Nefdt for collaborating on this article.

Co-manufacturers in S&OP/ IBP: Friends or Enemies?

Co-manufacturers in S&OP/ IBP: Friends or Enemies?

Did you know that Nike outsources 100% of footware and apparel manufacturing? The contract manufacturing industry is like secret AI, growing fast but just a few talk about it.

Research indicates that this market was valued at $211.9M in 2021 and it is expected to grow to $362.72M by 2029, at a CAGR (compound annual growth rate) of 6.95%.

In the 2023 Supply Chains to Admire, Supply Chain Expert Lora Cecere highlights that “over the last decade, with a 3% margin and a 1% growth rate, contract manufacturers experienced a 200% increase in growth during the pandemic.”

In addition to being challenging, this substantial growth implies that chances are that your company is or will be working with co-manufacturers—also known as co-mans.

In this article, we will cover the following:

  • Which is your co-man type?
  • What are the advantages?
  • What are the challenges?

Which is your co-man type?

Having been on both sides—working with clients’ contract manufacturers and having contract manufacturers as clients, I can attest that companies use different terminology.

Contract manufacturing is when a company fully or partially outsources production. There are mainly two types that are contract manufacturing itself and toll manufacturing.

In working with multiple co-mans, the same company could adopt both contract and toll manufacturing.

Contract Manufacturing

In contract manufacturing, the company outsources production including the sourcing and management of the raw materials.

The co-man’s role consists of processing by following the specifications provided and ensuring quality and availability of the raw materials. To do so, the co-man has a procurement team responsible for acquiring the right raw materials for production.

For example, I have seen this type of contract manufacturing with supplements where the co-man assisted with the formula development (R&D), ingredients acquisition and management as well as production of the finished products.

For some of the supplements, the contract manufacturer helped with the packaging as well.

Toll Manufacturing

In toll manufacturing, the company also outsources production to a third-party. Unlike contract manufacturing itself, the company pays the third-party a toll or fee for the processing services only, as it is the company who takes cares of the procurement of raw materials.

This business model is common among large companies. For example, Johnson & Johnson (J&J) selects and qualifies their raw material suppliers to then “dictate or mandate” them to the co-mans for processing. By doing so, J&J ensures that the raw materials’ quality meets the company’s standards.

Private Label

Great Value, Equate, Sam’s Choice are all private labels at Walmart, for example. Private label is when a co-man produces goods under the company’s brand. This is very common in retail.

What are the advantages of contract manufacturing?

When companies are experiencing fast growth—either organic or by acquisition—the demand outpaces supply.

Contract manufacturing is a potential solution to add production capacity quickly to reach balance between demand and supply in S&OP/ IBP.

In advanced S&OP, the team runs what-if scenarios to understand the impact on the financials of adding capacity through co-mans.

With contract manufacturing, the company avoids capital expenses (CapEx) and it has more flexibility to scale up or down in comparison to owning manufacturing facilities.

There are companies that use the contract manufacturing model to gain a competitive advantage with a longer strategic perspective.

Nike is one of the most well-known examples for being a pioneer in this area. Other high-profile examples include Adidas and Under Armour.

Contract manufacturers offer additional advantages including their expertise in manufacturing and taking care of running the plant, by managing machines, labor, and schedules.

All these advantages make contract manufacturers “friends”. However, they can also turn into “enemies” when considering the challenges.

What are the challenges?

Working with contract manufacturers poses challenges in two key areas: inventory management and planning. Let’s look at each of them.

Inventory management

Inventory management is fundamental because it impacts the bottom and top lines in the P&L. Having waste and incurring in unnecessary costs lead to a lower operating income and margin.

Inventory management also impacts the top line. If the products are not available when needed, there could be lost revenue and lost profit.

a big warehouse

So how well are your co-mans managing inventory? You want an answer for both contract and toll manufacturing.

As in contract manufacturing inventory management is on the co-man’s hands, you want to ensure that their performance meets your company’s requirements.

This implies not only a strong qualification process but also an on-going supplier performance evaluation. From the financial perspective, I wrote about potential liabilities in this article.

Although in toll manufacturing the co-man doesn’t source the raw materials, the efficient use of resources is important to avoid unnecessary losses.

In this case, the company owns the raw materials/ inventory and the co-man should be a good guardian of it.

Planning

When working with co-mans, there is less control as opposed to having internal manufacturing. The company depends on the co-man’s schedule.

For example, the company may have an urgent order for a large customer, but the co-man is unable to prioritize such an order, even when the company is willing to pay higher fees.

This example also helps to illustrate the importance of building a collaborative relationship with your co-mans. Another example is effectively communicating changes in packaging and more broadly, all related to change management.

Of course, another challenge is the data for S&OP coming from the co-mans. They generally have their own part numbers and may use different formats, reports, frequency, among other factors.

This increases the time that planners put into cleansing, formatting, and aggregating data coming from different sources.

Conclusion

Contract manufacturing has had an explosive growth. There are two main types that are contract manufacturing itself and toll manufacturing.

The key difference lies in the sourcing of raw materials. Working with co-mans has its challenges in inventory management and planning. When addressed successfully, contract manufacturing can catapult your company to substantial growth like Nike.

How to Use AI to Generate Excel Formulas for Supply Chain

How to Use AI to Generate Excel Formulas for Supply Chain

As a Supply Chain Manager, you have probably used Microsoft Excel for inventory control, financial-supply chain planning and a myriad of other tasks.

More often than not, multiple employees and other stakeholders work collaboratively on an organization’s spreadsheets.

One of the challenges you will probably encounter, is that not everybody on your team has the same Excel skills. Formula creation particularly, remains quite a challenge for many users.

However, there is now a simple way to address this common problem. In this tutorial, I will cover how to use two of the most popular AI tools, namely ChatGPT and Formula Bot, for Excel formula generation.

So, let’s get started.

AI and Supply Chain Management

AI has garnered a considerable amount of attention in the media. One of the key benefits of AI is that it can assist with automating and simplifying complex processes. You can also use AI for data analysis purposes.

Now it may be a daunting thought at first, to consider integrating AI into your existing supply chain. You would probably want to test drive it first, in a familiar interface. This is where Excel comes in.

By using AI to simplify the process of formula creation for example, you can get buy-in from your team and other stakeholders to integrate AI into other areas of your work.

Using ChatGPT for Excel Formula Creation

ChatGPT is a popular, natural processing language AI chatbot. This means that you can have human-like conversations with the chatbot to assist you with writing essays, code or in this case generating Excel formulas.

So, let’s see how to do this using a simple example.

A few years ago, I was working as a supply chain consultant for a CPG company. One of my main tasks was evaluating suppliers and the amount spent on the different product categories. We designated suppliers as either preferred for a certain product category, or backup.

Backup suppliers were only utilized, if the preferred supplier couldn’t meet the company’s demand due to the required volume, for example.

In our dataset below we have a list of supplier names, the products they provide, their designation and the amount spent on each specific supplier.

table 1

We want to use ChatGPT to give us a formula that will calculate the total amount spent on preferred suppliers, in cell D11.

  • So, the first thing you need to do is go to the ChatGPT website and sign up for an account.
  • Once you have logged in, you should be taken to the chat page, where you can start sending prompts to the chatbot.

chatgpt 3.5

  • Type the following prompt in the Message Box.

Create an Excel formula to add the amount spent on only the preferred suppliers. The supplier type is in range C2 to C9. The amount spent for each supplier is in range D2 to D9.

chatgpt 3.5 prompt enter

  • Click on the black arrow button and you should see the following.

chatgpt 3.5 sumif

  • You can see that ChatGPT has generated a formula for us. So, click the Copy code option to copy the formula.
  • Now go back to Excel and paste the formula in cell D11.

sumif c2c9 green highlight

Tips for Using ChatGPT for Excel Formula Generation

  • Think about what you want to do in Excel in terms of your desired output.
  • Provide information in plain English about the type of calculation you’d like ChatGPT to perform (addition, subtraction etc.), the inputs and desired output where applicable.

Limitations of ChatGPT for Excel Formula Generation

  • Bear in mind that if you need a complicated formula for a more advanced task then it’s best to create the formula yourself or get someone with advanced Excel skills to create it for you. At the moment, ChatGPT is best utilized for simple formulas.
  • The free version of ChatGPT is based on data that goes up to the year 2023.
  • You may get a different formula for the same prompt, and at times this formula may not work so always double-check.
  • Since ChatGPT is such a popular tool, there are times when it may be quite slow because of high traffic volume. So don’t use ChatGPT if you need formulas for an urgent work-related deadline.

Using Formula Bot for Excel Formula Creation

As the name implies, this AI bot was designed specifically with Excel and Google Sheets formulas in mind. Currently it can create slightly more complex formulas than ChatGPT.

It can also return more than one formula to solve a problem.

Supply chain extends to revenue generation—beyond cost reduction—with focus on the customer.
This implies that the organization’s customers should get the right product, when they need it, at the price they are happy to pay for.

Consequently, evaluation of the customer experience is a critical area of supply chain management and optimization.

I consult in the B2B space, and often have to assist companies with evaluating their customer experience.

So, let’s look at a simple example involving customer experience.

A hypothetical retail store has outlets in several states. The customer service department sent surveys to customers in each state they operate in, asking them to evaluate their customer experience.

They recorded the location, and the general customer experience garnered from data analysis of the survey data. The data was imported into Excel in one column.

In our dataset below, we have the location of the outlets and customer experience given in column A. The state and customer experience in each cell in column A, is separated by a comma.

imported from database screenshot

We want to use Formula Bot to give us a formula or formulas, that will return only the location in terms of state in cell B2 and the general customer experience in cell C2.

So B2, should have the location from cell A2, and C2 should have the customer experience from cell A2 noted.

  • So, the first thing you need to do is go to the Formula Bot website and create a free account.
  • Once you have logged in, you should be taken to the Dashboard portal page.

formulabot app homepage

  • Scroll down to the Generators section. In the green Formulas section, click on the Use Generator option.

formulabot main page with various options

  • You should see the following.

formulabot excel google sheet update

  • Scroll down and while still in the Input Section, check the Excel option. In this case just the formula is needed, so check Generated.

formulabot excel generated options

  • Type the following instructions.

Split the text in cell A2 containing two words separated by a comma, into two separate words in cell B2 and C2

formulabot split the text in cell

  • Click the Submit button.
  • The following output formulas are generated, as shown in the Output section. The bot generates two formulas to solve the problem in this case.

=TRIM(LEFT(A2,FIND(“,”,A2)-1))

=TRIM(RIGHT(A2,LEN(A2)-FIND(“,”,A2)))

Output section

  • You can copy the first formula by highlighting it in the Output section, and pressing CTRL-C on your keyboard.

You can then return to Excel and paste the first formula in cell B2.

excel sheet trim formula

  • Drag the formula down the column to see the following.

excel imported from database

  • Now return to the browser and copy the second formula. Paste it in cell C2 as shown below.

excel trim right formula

  • Drag the formula down the column to see the following.

excel final result sheet

Note: While there is a newer, dynamic array function called TEXTSPLIT that will do the same thing, these formulas will work in all versions of Excel.

All in all, Formula Bot generated two formulas to solve the problem. This is quite useful, and a level up compared to ChatGPT.

Tips for Using Formula Bot for Excel Formula Generation

  • Like with ChatGPT think about what you want to accomplish in Excel and give the bot specific instructions.
  • Provide more information about the problem you’d like to solve or the calculation you’d like to perform. In addition, provide the cell references or columns where necessary.

Limitations of Formula Bot for Excel Formula Generation

  • The free version only allows one to generate five formulas a month. This is not nearly enough if you constantly need to generate formulas, for work-related purposes.
  • For longer and more complicated formulas there is a slim chance that the bot may not understand what you are requesting. So, you should always check for errors.
  • The interface is not as user-friendly as some other AI tools. However, it is being constantly updated.

Going Beyond Excel Formulas with AI

Creating formulas with AI is incredibly useful but you might be wondering about what the next step in your AI integration journey is. The answer to that question could be Microsoft 365 Copilot.

Microsoft 365 Copilot is an AI tool developed by Microsoft for Microsoft 365 apps. It is embedded in apps such as Word, Excel, PowerPoint and Teams.

You can use co-pilot for more advanced data analysis in Excel such as analyzing trends, and creating sophisticated charts. You simply instruct the AI, using natural language.

Considering recent developments, this tool seems like it has the potential to be a real game-changer for many Excel users in the future.

Conclusion

AI can open a whole world of possibilities for your organization. However, if you want to start integrating AI into your existing supply chain processes, I recommend starting with simple tasks.

Since Excel is used for both simple and complex data analysis, it’s a good starting point for AI integration.

I hope you found this tutorial useful. Please let us know in the comments below, about your thoughts on using AI with Excel.

A special thank you to Taryn Nefdt for collaborating on this article.


About Marcia Williams

Marcia Williams, Managing Partner, has 18 years of experience in Supply Chain, with expertise in optimizing Supply Chain-Finance Planning (S&OP/ IBP) at Large Fast-Growing CPGs for GREATER Profits with Automation in Excel, RPA, & Power BI.

Marcia has helped mid-sized and large companies including Lindt Chocolates, Hershey, and Coty. She holds an MBA from Michigan State University and a degree in Accounting from Universidad de la Republica, Uruguay (South America).

Marcia is also a Forbes Council Contributor based out of New York, and author of the book series Supply Chains with Maria in storytelling style. A recent speaker’s engagement is Marcia TEDx Talk: TEDxMSU – How Supply Chain Impacts You: A Transformational Journey.

S&OP vs. FP&A: Is this a competition, really?

S&OP vs. FP&A: Is this a competition, really?

It’s shocking to see how similar S&OP and FP&A are. To be more precise, demand planning in S&OP resembles FP&A the most. In fact, the skills required in FP&A matches those in demand planning. In this article, you will learn the following:

  • What’s FP&A?
  • What are the similarities with demand planning and with S&OP?
  • What are the differences with S&OP?
  • How can we go from “vs” to “and”?
  • What are the differences between IBP and XP&A?

What’s FP&A?

FP&A is a function within Corporate Finance. The FP&A acronym conveys the main activities that the team performs. They are Financial Planning and Analysis.

The focus is on the financial and strategic aspects in an organization. It involves developing a budget, annual operating plan, and the three-statement model forecast—P&L, balance sheet, and cash flow statement.

All these tools are forward-looking, and the goal is to provide sound strategic recommendations to Senior Leadership. The tables below show the definition, scope, period of time and examples of these tools.

What

Budget

Definition

It shows the resources that an organization has available.

Scope

Line-item detail of the P&L with the targeted dollar amounts.

Time Period

One year.

Example

The budget of a new product launch including estimated production cost, shipping cost, and marketing expenses, among others.

What

Annual Operating Plan

Definition

Comprehensive roadmap on the budget’s execution.

Scope

Granular and detailed explanations on how to use the annual budget.

Time Period

One year.

Example

For the marketing expenses budget of the new product launch, it details the allocation among ads, store samples, email marketing, social media, etc.

What

Forecast

Definition

A prediction or an estimate considering facts and probable assumptions.

Scope

It varies. The narrower the scope, the higher chances for inaccuracies.

Time Period

It varies too. The longer the period, the higher chances for inaccuracies. Think of the weather forecast.

Example

A sales forecast. If the forecast is by SKU, there will be higher chances for inaccuracies than by product family/ group.

Because of the advances in technology, the cloud, and Covid-19, FP&A has evolved into a top finance function. It has a strong accounting component, but the focus and objectives differ with accounting.

During my time as a full-time accountant before entering the supply chain world, my main activity was building the three financial statements—P&L, balance sheet, and cash flow statement—based on past transactions.

I needed to ensure that the financial statements were compliant. FP&A is more fun because it looks into the future and provides strategic advice, similar to what demand planning and S&OP do.

What are the similarities with demand planning and with S&OP?

The Hackett Group has put together an excellent diagram to show where demand planning, S&OP, and FP&A fits. Demand planning is a step in the S&OP process to balance demand against supply. This is shown at the bottom of the diagram.

Financial planning—FP&A—is the next level, translating the operational plans into financial plans which are linked to the strategic planning, at the top of the diagram.

Demand planning and financial planning share their focus on the future and on providing leadership with actionable insights. Both teams create forecasts and analyze variances in price, volume, and mix. Both teams work with marketing and sales as well.

integrated business planning

Demand planning, S&OP, and FP&A face the same challenges too. In an insightful article, Eric Wilson states that the demand planning and FP&A teams feel the same pressures to do more with less and the need to keep pace with the business of tomorrow.

Wilson encourages integration between demand planning and financial planning as the solution for better decision making.

The challenge is that in many organizations, S&OP has evolved separately from the financial planning that FP&A teams perform, as noted in a recent article from FP&A Trends.

When this happens, it is a dead-end street, as S&OP loses strength being perceived as a process within supply chain only.

What are the differences with S&OP?

Although both acronyms—S&OP and FP&A—refer to planning, they are different in the following aspects:

  • Scope: S&OP has its origin in supply chain and as its name denotes, it is about operational planning. FP&A, on the other hand, lives in finance and it is about financial planning. Another point related to scope is that S&OP has a strong application in manufacturing companies. FP&A applies to all companies.
  • Unit of measure: S&OP manages physical units with different unit of measure. FP&A uses monetary units or value.
  • Metrics: Naturally, S&OP uses supply chain metrics related to physical units and time while FP&A uses financial metrics.
  • Approach: S&OP uses a bottom-up approach—from the granular level to high level—while FP&A typically applies a top-down approach.
  • Planning Horizon: S&OP has a monthly cadence and S&OE, a weekly cadence. FP&A sometimes works with longer planning horizon such as quarters.

How can we go from “vs” to “and”?

“Vs” conveys competition between S&OP and FP&A. It doesn’t have to be that way. Let’s change it for “and”. Integration of both—operational and financial planning—linked to strategy is the answer. Instead of evolving independently, S&OP and FP&A merge in Integrated Business Planning (IBP) or Extended Planning and Analysis (XP&A).

To facilitate integration, there are two critical aspects:

  • S&OP and FP&A team members need to sit in each other’s meetings to then decide which meetings to keep. This exploratory phase will contribute to understand and help each other better. There are more similarities than differences!
  • All team members need to speak a common language that is the language of the business. This is finance and accounting.

Of course, both teams must be willing to collaborate to build a win-win relationship.

What are the differences between IBP and XP&A?

Both concepts—IBP and XP&A—refer to such a merge between operations and finance aligned with strategy. The difference is the origin: from S&OP to IBP; from FP&A to XP&A. IBP and XP&A represent the most advanced maturity in planning.

Along the same lines, Niels Van Hove explains that “xP&A and IBP have the same objective: tightly integrating strategic, financial, and operational plans with budgets.

They’re planning processes that have evolved from a separate functional origin. Both are eager to integrate further and provide better forward insights to facilitate better business decisions.”

To conclude, there are no fundamental differences between the IBP and XP&A concepts.

Forecasting & Planning: Go from Tears to Cheers in 7 Actionable Ways

Forecasting & Planning: Go from Tears to Cheers in 7 Actionable Ways

Confession to make. When I was reading Eric Wilson’s insightful and entertaining article about what forecasters can learn from Punxsutawney Phil on Groundhog Day, I couldn’t stop thinking about a couple of sentences, like those songs that get stuck in your head. No matter how hard you try, they stay there.

The culprit sentences were “it really doesn’t matter if he’s right or not, and people throw him a party and celebrates what he says. If only we were treated with the same respect at our companies.”

If you haven’t had a chance to read Eric’s article, the “he” is Phil, a cute hairy marmot that forecasts the weather. In essence, Phil is a forecaster as you are in demand planning—part of S&OP—or in financial planning and analysis (FP&A).

Why is Phil getting applause, fame, and unconditional support when presenting a forecast? What is he doing differently than a demand planner or FP&A practitioner? These are the kinds of questions that I had in my mind.

As time passed and it seemed that these questions wouldn’t go away, I decided to demystify what Phil does to go from tears to cheers when presenting your forecast.

This article contains my thoughts to make that transformation from frustration to celebration happen. Below I have listed 7 actionable steps that our furry friend Phil applies.

Actionable Way #1: Focus on the process and not on the results.

With Phil’s forecast, as Eric states in his article, nobody cares if Phil is right or wrong. That’s not the point. The focus is on the process preceding the forecast’s presentation.

Shift your focus to the process instead of the actual forecast. What is relevant is what you learn in the process; for example, the data sources to use.

A quote from Dwight D. Eisenhower summarizes best: “I have always found that plans are useless, but planning is indispensable.”

Actionable Way #2: Agree on metrics and targets.

Metrics and targets are clear in Phil’s forecast. In this tradition, if Phil sees his shadow, it implies that there will be six weeks more of winter.

If Phil doesn’t see his shadow, the forecast is an early spring. What we are measuring here is the shadow.

Metrics and targets are important in demand planning, S&OP, and in FP&A. In the most advanced S&OP processes—also known as integrated business planning (IBP)—there are operational as well as financial metrics for growth, profitability margins, working capital and cash flow. It’s critical to get alignment on the KPI scorecard.

Actionable Way #3: Speak the language of leadership.

Phil speaks to the president and then the president communicates the result to all the congregation. The president and Phil understand each other because they speak the same language.

Demand planning, marketing and sales, finance, operations, supply chain must speak the same language.

While the native language for demand planning and supply chain can be physical units and metrics, it’s fundamental to have translators to speak the language of the business that is finance and accounting. This ensures a clear understanding from leadership.

Actionable Way #4: Obtain executive support.

The Pennsylvania governor, the members and president of the inner circle were all present in Punxsutawney to support and cheer Phil.

Demand planning and FP&A are the windows into the future. They have a critical impact on how the organization evolves. By obtaining executive support, demand planners and FP&A practitioners can overcome challenges on their path for a brighter future.

Actionable Way #5: Encourage stakeholder engagement.

Groundhog Day is a full party that everyone feels part of. Of course, there is Phil, but also live bands, songs, dance, and more. It is such a party because of the engaged participants.

Make the other teams participate and engage with your forecast. We want to work on breaking apart the functional silos. Have conversations with other teams. Sit in their meetings. The results of these simple actions will surprise you.

Actionable Way #6: Have one set of numbers.

Phil delivers one forecast only. It’s either six weeks more of winter or an early spring. There are no groups arguing about a different result. All go with Phil’s forecast.

One set of numbers is key. This actionable step builds on the previous one, as there is no other way to achieve it than with a high stakeholder engagement and involvement.

Wouldn’t it be great that demand planners, sales and marketing, strategy, FP&A/ finance talk to each other to have one sales forecast?

Actionable Way #7: Make it a party.

Phil’s forecast is a celebration. It doesn’t matter if he is right or wrong. All is joy about it.

Of course, you want your forecast to be accurate because of its critical importance to your organization. However, having a more collaborative approach with a high stakeholder engagement increases the chances of a more accurate forecast.

Let’s celebrate the process. Let’s embrace the learning experience with each of your forecasts.

Demand planners and FP&A: cheers to your next forecast!