Logistics operations are becoming increasingly complex and challenging as we deal with shorter delivery times, differing customer preferences, and many supply chain disruptions. Demand planning and forecasting tools allow businesses to anticipate and plan for future sales, ensuring customer satisfaction.
Demand planning and forecasting techniques are applied to achieve and maintain the optimum stock levels. Finding that perfect spot between enough and too much stock is not easy. The goal is to strike a balance between having sufficient inventory levels at all times to meet customer needs without overstocking and creating obsolescence.
The significance of demand planning and forecasting in the supply chain
Supply chain efficiency is vital to stay competitive in a dynamic marketplace. Inventory levels must be monitored and adjusted regularly to save costs, ideally in real-time. Too much stock means cash is tied up, and you need extra expensive warehouse space. Besides focusing on inventory management and staffing, demand planning and forecasting help to optimise logistics and transportation networks. Accurate demand forecasting helps companies:
•Reduce excess inventory and stockouts.
•Develop better supplier relationships.
•Set efficient staffing levels
•Optimise logistics operations.
•Ensure customer satisfaction.
Technology trends in demand planning and forecasting
Demand planning software solutions are designed to help predict future customer demand in an uncertain environment. Advances in applications of machine learning (ML) and artificial intelligence (AI) within the supply chain are making it possible to adapt and update forecasts in real time. Forecasts can be generated by product, group, sales channel, and key customers and fed back into an inventory or warehouse management system (IMS and WMS).
Collaboration across the supply chain
Successful sales and marketing strategies depend on collaboration between all stakeholders. That includes suppliers, procurement, production, finance, and logistics personnel. Suppliers can use the shares demand forecast to plan production and reduce supply disruptions.
Note: Not all forecasts can be created and managed using historical data. Cross-departmental collaboration and market research are needed for new product lines to identify potential customers and future sales.
5 best practices in demand planning
1. Data Collection: Gather historical sales data, market trends, and other relevant data. Data drives demand planning now more than ever. Ensure that data is cleansed, verified, and comprehensive.
2. Demand Forecasting: Use statistical models and software to generate demand forecasts. Invest in a robust demand forecasting tool that can handle large amounts of data and provide accurate predictions.
3. Collaboration: Encourage collaboration between stakeholders, including suppliers, sales, marketing, finance, and supply chain, to align forecasts with business objectives.
4. Differentiation. Segment products based on demand patterns, product lifecycle stages, and profitability. Segment customers based on buying behaviour, preferences, and order patterns. This allows for more targeted forecasting and planning.
5. Inventory Optimisation: Determine appropriate safety stock levels to buffer against demand variability and supply chain disruptions.
Choose the right solution for you
There are many options when it comes to demand planning and forecasting software so choosing the right one is important. The solution you select should be able to integrate with other supply chain applications such as WMS and any company-wide ERP system.
The Supply Chain Consulting Group will guide you through the process by first diagnosing your company’s demand planning and forecasting challenges. Our supply chain consultants delve into your current processes, identifying gaps and inefficiencies. This critical analysis provides insights into areas for improvement and lays the groundwork for selecting a demand planning system that aligns with your specific business needs and objectives.
If you’re looking to speak to our supply chain consultants about your demand planning challenges, contact SCCG at info@sccgltd.com or +44(0)1926430883.
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