Demand Planning On Supply Chain Performance: A Case Study of FMCGs in Kenya

A Research Project Report submitted to Chandaria School of Business in Partial fulfillment of the requirement for the Degree of Master in Business Administration (MBA)The general objective of the study was to find out the contribution of demand planning towards improving supply chain performance. Specifically, the study sought to achieve the following specific objectives; To find out the role of forecasting towards inventory optimization; To find out the role of supplier partnering towards inventory optimization; To find out the role of demand planning towards Supply Chain cost reduction. The researcher adopted descriptive and explanatory research designs. The target population for this study was Fast Moving Consumer Goods located within Nairobi and Kiambu County. The researcher adopted a stratified sampling technique.The target sample size for this study was 80 individuals holding positions in the target organisations.Primary data was aided by a research assistant using a structured questionnaire.After Data collection,data was first coded into the Statistical Package for the Social Sciences. Both descriptive statistical techniques and inferential techniques were demployed for analysis. Inferences were drawn using correlation and data was presented in tables, pie and bar charts. From the findings the study found out that majority of the respondents indicated that supply chains in their organizations perform forecasting and of the respondents who indicated that their organizations’ supply chain perform forecasting majority indicated the forecasting duration between 6-12 months. Concerning supplier collaboration, the findings found that partnering among supply chain players enhanced the reliability of their supply chain by ensuring that suppliers remained in stock of the required items. To enhance this reliability, the supply chain partners need to continuously engage in early supplier involvement and Collaborative Planning Forecasting and Replenishment activities. Further, the study found out that Electronic data interchange, Collaborative Planning Forecasting and Replenishment, Early Supplier Involvement and Supplier development influenced the reliability of the supply chain to a large extent. In terms of demand planning, the study found out that demand planning plays a critical role in the reduction of the overall costs of a supply chain by enabling better visibility of supply chain costs, reducing mismatch of processes along the supply chain and reducing uncertainties along the supply chain. To improve supply chain performance, organizations need to incorporate forecasting to reduce inventory holding and enhance inventory optimization and should incorporate Sales Inventory and Operations Planning to enhance accuracy in forecasts and inventory holding. Concerning supplier collaboration, organizations should pursue partnering and early supplier involvement to increase supply chain reliability. In addition, organizations should participate in Collaborative Planning and Forecasting, Supplier development and Electronic Data Interchange to further enhance the reliability of their supply chains. Finally, to reduce and improve visibility of supply chain costs, organizations should embrace demand planning from which they are likely to also reduce mismatch of processes and clear uncertainties along the supply chain. Another study which considers the economic background of respondents should be carried out to corroborate the results of this study. The study concludes that supply chains in their organizations perform forecasting and that forecasting leads to a reduction in inventory holding in the organizations; that there is a direct link between inventory forecasting and inventory; that Sales Inventory and Operations Planning accurately guides the inventory quantities to carry at a given time and that Sales Inventory and that Operations Planning improves the accuracy of forecasts generated. The study recommends forecasting in inventory since forecasting is the epicenter of all Supply Chain Management activities which triggers all other activities both within and outside the organization. Forecasting is the key driving factor in planning and decision making in SCM as well as enterprise level and that companies that companies that perform exceptionally well rely on true numerical value of forecasting to make decisions in capacity building, resource allocation, expansion, process scheduling among others