In short, demand planning is part of a supply chain management process. It enables you to project your future demand to successfully customize your company’s output, whether a product or service. Hence, it helps to achieve and maintain an adequate supply balance where it can store inventories with many products as demand dictates but not more.
Thus, finding the perfect balance between sufficiency and surplus can be tricky. While maintaining a balance is your significant concern, so is the constant effort to shape the demand using practical promotional methods.
Effective demand planning all comes down to the forecasting techniques used to accurately predict demand trends and carry those benefits forward.
Why is Demand Planning Important for Your Business?
Demand planning is the kingpin of having an adequate supply chain as it serves two functions, making it double important. Firstly, you always want to protect a sale from generating expected revenues.
However, as a retailer, you cannot sell a product if it is not in stock. So, you need to meet the supply-demand for a lasting impression. With planning, you can see if you have the right amount of inventory at the right time to prevent stock-outs and always be prepared for your next sale.
Hence, demand planning helps your business run efficiently and manage your inventory smarter. With supply chain software, you can prevent overstocking and sell merchandise as fast as possible.
The Fundamentals of Demand Planning
When you look at demand planning in the supply chain, there are some fundamentals:
- Product portfolio management – You must understand your products or service and their lifecycle with effective brand management. The service offers detailed listings of products, including their lifecycle, origin, and when they will be phased out.
- Statistical forecasting – You get complex algorithms to analyze historical data and develop your supply chain forecasting.
- Demand sensing – it works with a combination of weather, disease trends, government data, and more. The AI detects demand influences and disruptions in real time.
- Trade promotion management helps spark interest in your potential customers with trade promotion and other marketing strategies. In addition, it allows you to properly execute and deliver your benefits on time.
The Primary Steps of Demand Planning
The approach to demand planning varies from one organization to another. Still, some general steps remain in place that need the following:
- The preparation and organizing of data
- To make an initial forecast
- Adding the market data
- Reconciling all forecasts from bottom-up to top-down
- Creating a final forecast
- Using the analytics to keep an eye on your project performance
Conclusion
When you use supply chain software, you can carefully assemble your data and choose the right tool based on your needs. In turn, you can coordinate strategies with the descriptive analytics data developed to shape your actual plan. The truth is that the future of demand planning in supply chain management is increasing as it provides advanced learning allowing you to reap the benefits.
