Demand Planning Part of the Supply Chain
In short, demand planning plays a huge role when it comes to your supply chain management. You must make your business run efficiently to maximize your supply chain profitability. You need accurate planning for your inventory to revenue.
Demand Planning is a Supply
Demand planning plays a huge part in the supply chain process regarding forecasting or the need to predict customer product demands. It helps you to deliver products on time to have satisfied customers.
Hence, you must balance having enough inventory and meeting your customer needs without an over-run on the manufacturing line. Many things can influence your demand and labor force, from severe weather and global crisis to economic shifts.
The Aspects of Demand Planning
When you look at demand planning, it spreads over different aspects, but there are three primary areas to look at:
The Product Portfolio Management
The section oversees the product lifecycle, from introducing new products to the end planning. Some product lines are inter-reliant. Therefore, understanding how new products influence demand for your other products helps maximize the market share.
Provides a Statistical Forecasting
With historical data, you create statistical forecasting that helps the supply chain as it works with advanced algorithms. Here you need to determine the accuracy of each model to identify exclusions and outliers to understand assumptions. This can be from a seasonal shift between October to December or even boosting your yard equipment sales during spring. Again, you can assess this information with statistical forecasting.
Helps Your Brand Connect With Customers
With Trade Promotion Management helps to plan sales events according to customer demands. Hence, you can schedule promotions in the retail industry for your brand to connect with your client. For example, discounts, in-store giveaways, and promotions as it impacts demand for specific products.
The Importance of Demand Planning
In the supply chain, when products are unavailable to buy as they are out of stock, you lose business and revenue. With time it becomes a massive loss as customers go to the competitor.
Furthermore, sitting with unused products in the inventory takes up space and causes a loss in production costs.
When you have demand planning in supply chain management, you remain in front of market shifts. As a result, you can make hands-on decisions and still be responsive to your customer’s needs.
Following the Best Practices for Demand Planning
In supply chain management, demand planning comprises multiple processes, and you need the right tools to provide you with information. The best supply chain software helps with product positioning, inventory needs, and organizational goals.
The ERP system can provide you with reliable forecasting to gather and prepare data in real-time to identify areas you can improve. Furthermore, it helps define the process models and monitors everything throughout the business to adjust accordingly to reduce errors.
But, of course, while you might have the best supply chain software, you still need a dedicated team to run it.