Evaluating future demand planning accuracy is essential for every business’s success. But in this fast-paced supply chain ecosystem, it’s almost impossible to do it without proper role of demand planning software. No other aspect of supply chain management significantly impacts on your business profitability, yet it’s not unusual to blame a bad forecast for poor performance. Delivering a precision-based accurate planning strategy requires the best demand forecasting software that captures data close to its source and perfectly predicts the real demand with sufficient lead time and confidence to ensure enhanced sales and operational performance with reduced costs.
The demand planning platform applies science to provide a better forecast. While forecasts have long been evaluated using limited resources like spreadsheets and a hunch, leading supply chain planning solutions providers strive for multi-layered dimensions that employ a variety of statistical methods in an unbiased way to drill down many factors that drive demand for products in the marketplace over time. Today’s businesses achieve higher supply chain performance with insightful and agile demand planning solutions.
The role of demand planning goes way beyond traditional methods. Let’s explore a few key points which discuss the role and importance of demand forecasting:
Explore Beyond the Spreadsheets
Considering how vital the forecast is to any business's profitability, it is surprising that many organizations still use spreadsheets and ERP (Enterprise Resource Planning) systems to generate their forecasting. When we look at the demand forecasting life cycle, we can easily observe how complicated the forecasting process can be for a single product. Even the most effective spreadsheets cannot determine how a planner should adapt to upcoming or new product introductions from its maturity to end-of-life.
As the product life cycle reveals, comparing actual market demand versus the forecast becomes essential. With the help of efficient demand forecasting software, you can perform statistical matching algorithms to evaluate just how significantly actual demand has drifted from the forecast. This predictive accuracy can be compared for the most effective decision-making process and appropriate implementation.
Stratify High-Level Demand Forecast to Tactical Levels
Demand stratification is the key to creating the best possible demand forecasting at all levels of granularity to accommodate strategic plans with operations plans. The balance between a bottom-up approach and top-down statistical modelling is difficult. Still, an automated demand planning platform can quickly resolve demand planning requirements with maximum visibility and accurate reporting of your demand planning requirements.
Usually, the most accurate predictions are achieved by differentiating higher-level demand forecasts to tactical levels. This way, you can divide forecast errors prevalent in higher tiers into more minor inaccuracies at the lower levels of demand forecasting.
Focus on High-Effect Activities
One of the most crucial dimensions of demand forecasting in supply chain. optimization is their ability to focus on valuable high-effect activities like problem avoidance, issue resolution, and optimization.
When historical sales data becomes available, agile demand planning software starts monitoring the comparison between the existing demand curve and the actual demand signals. A centralized dashboard displays a real-time view of important conditions that have deviated from set targets or expectations. Sales and demand irregularities may occur at the SKU locations, geographies, and product groups. This system responsibly creates custom alerts as required to support the priorities and goals of the business.
Having an integrated set of KPIs across your business, from the supply side to the demand side, at every level of forecasting, everyone stays connected and on the same page regarding overall performance with combined customer service metrics.
Emphasize Collaborative Planning
Access to what customers, internal stakeholders' needs, and market requirements can further drive a more accurate supply chain forecasting and provide practical input to the sales and operations planning (S&OP). There is no better contribution to decision-making than collecting information closer to the demand signal and receiving feedback. Recent technologies like AI in demand forecasting. allow you to break departmental silos and deliver comprehensive access to every minute detail of your business.
Making a business successful requires formalized processes to anticipate time-phased customer replenishment and inventory needs precisely. Effective inventory planning automatically triggers replenishment orders, and parameters are set for managing returns, establishing inventory goals, and handling slow-moving products. By delivering automated alerts, prioritizing events, and a high level of automated conflict resolution, collaborative demand forecasting software encourages business leaders to become more proactive than reactive, emphasizing their attention on certain situations before they turn into major issues.
A brilliant demand and inventory planning software ensures that your business is provided with the most accurate forecasting, actionable insights, and optimum visibility access, giving all departments a unified view of what is to come soon. The internal communication between sales, marketing, and operations can work together with clarity and mutual understanding whenever the demand prediction plan is about to be built based on solid ground, backed by facts and proven techniques rather than guesswork and hunches.
As we have experienced, providing the most accurate forecast requires utilizing advanced solutions to manage comprehensive data, stratifying high-level demand, focusing on the key metrics that matter, and emphasizing a collaborative working environment. A demand planning platform is the foundation for any thriving business, ensuring all the resources in your supply chain forecasting have confidence in the numbers and focus on a common goal.
Demand Planning Software from Avercast, a TransImpact Company, provides end-to-end technology solutions to quickly and easily retrieve the information you need to make effective decisions for your business. With our deep experience and keen business insights, we are transforming the business performance for our clients. To understand more about our solution, talk to our expert or schedule a demo.