Operations departments support their company’s sales by having the right product at the right time and place while keeping costs within budget. The critical starting point to making this happen is having a clear and detailed understanding of the projected sales for the organization. The person responsible for building this forecast and preparing the operations for success is known as the demand planner.
What Is a Demand Planner?
A demand planner is responsible for evaluating multiple inputs and historical data to develop the most accurate sales forecast possible. They are usually part of the operations function within an organization but must be equally comfortable working within the sales, marketing, and finance departments. Some consider them “translators” because they must take information from many sources and translate it into a forecast of anticipated sales within a specific timeframe.
What Does a Demand Planner Do?
At a high level, a demand planner works closely with all functions that impact future demand – typically sales, marketing, and finance – to develop a demand forecast for the products they sell. This involves taking a diverse and complex set of inputs, filtering out the noise and biases, and building a forecast that reflects actual expected sales. It is often broken down to the region, channel, customer, and item levels. Many of the inputs received are in dollars, so demand planners must translate that data into number units for projected demand. This requires demand planners to have intimate knowledge of the business, products, and customers.
Technology has changed the demand planning process significantly over the past decade. In the past, this entailed working with sales and marketing teams to manually review historical sales data and project future sales. With emerging tech capabilities (e.g., machine learning and artificial intelligence), new digital tools can instantly process hundreds of statistical scenarios, along with the confidence interval, for the demand planner to review. These tools can factor in other data points that may impact a company’s sales. Aspects like weather, unemployment rate, and the housing market, to name a few, can quickly be evaluated to determine if there is a correlation to sales and, if so, used to enhance sales forecasts. These factors have changed the role of the demand planner to be more system- and technology-focused than in years past.
The demand planner will hand the output of a unit forecast to the operations planning team (usually to a supply planner). The operations planning team then creates a tactical plan of what to buy and make and how to maintain inventory throughout their supply chain. This information will also help inform leadership on revenue projection progress for the organization and insights into how to allocate resources and spending.
Key Responsibilities of a Demand Planner
The Demand Planner is ultimately responsible for delivering a volume demand plan at the item level for an organization. The details and timeframe for the plan vary by company but are always used to make decisions on purchasing, production, inventory targets, capital expenditures, and hiring plans.
This work involves partnering closely with sales and marketing team members to understand the anticipated activities that might affect sales. These activities can include:
- Promotions & advertising
- Change in number of stores/customers
- New product launches/discontinuations
They must then use historical data and market intelligence to forecast the total unit sales for each item. In many cases, the forecast will incorporate geographic locations to ensure products are held in the right places to fulfill the demand. This is typically a monthly process to constantly refresh the demand outlook and allow the supply team to course correct per the updates.
Education & Career Path for Demand Planners
While not absolutely necessary, most demand planners have a bachelor’s degree in a business (business administration, finance, etc.) or a supply chain (SCM, operations management, etc.) field. Earning a concentration in mathematics or statistics is also becoming increasingly helpful due to more sophisticated forecast modeling tools. According to Zippia, approximately 75% of demand planners have a bachelor’s degree.
A candidate’s past performance and work history are often the most significant factors in earning a demand planner position. It is important to bring knowledge of the specific company’s product and market or the demand forecasting best practices. Therefore, you can grow into the demand planner role from within a company after being involved in product- or sales-facing positions such as sales analyst, customer service representative, or supply chain associate. If coming from another company, it is usually important for that candidate to have prior demand planning experience so that they are not attempting to learn both the company and the technical aspects of the role simultaneously.
Successful demand planners can advance to higher positions, including:
- Demand or supply planning manager
- Supply chain manager
- Sales representative
As a demand planner, the knowledge gained about the company and market is extremely valuable. Demand planners can leverage those insights to move into many other areas of the business operations, depending on your professional interests.
Skill Sets of a Demand Planner
With the latest technology and digital tools, a demand planner needs to adapt to a versatile set of skills to truly capitalize on the tools’ potential and deliver the most accurate forecasts. It now requires an equal blend of soft and technical skills to thrive in the role. Specific skills found in the most successful demand planners include:
- Strong listening skills – They must genuinely understand inputs from multiple sources, which are often conflicting.
- Decision making – Given multiple conflicting points of view of a potential forecast, they must assess everything and make a final decision.
- Analytical & enjoy numbers – Everything revolves around numbers – they should enjoy math and understand the principles behind statistical modeling.
- System savvy – There will ultimately be at least one system that is the platform for the forecast creation that they must work with exclusively. Maintaining clean data is essential.
- Influence – Once they’ve decided on the forecast, they must be able to convince all stakeholders why they should trust it to make their respective decisions.
- Communication – Must be able to articulate the assumptions behind their forecast and the alternatives considered.
Demand Planner Outlook
The increased global supply chain disruptions make an accurate and ongoing demand forecast more important than ever. The forecast is the first step to ensuring correct supply chain capacities and capabilities are in place; not having that forecast in place invites unknown risk. Because of this, more organizations that might have gone without a demand planner in the past are likely to bring one into the organization. However, the increasing efficiency and accuracy of AI technology could reduce the need for demand planners by large companies in the future. These two factors are behind modest growth projects for the demand planner position – Zippia estimates a 5% growth rate.
Compensation is highly variable. Company size and industry, location, and professional experience will impact a demand planner’s salary. Whether the company uses sophisticated software to drive planning is also a factor because the skills needed to operate these systems are greater and harder to find than manual forecasting methods. As a result, the average salary for a demand planner is $85,240 (According to Zippia).