“We need robust demand planning” is a phrase I hear from almost every client. Demand planning accurately forecasts customer purchases, essential to any business that buys/builds goods. At a basic level, the definition of demand planning and its crucialness to business are self-explanatory. However, successfully implementing demand planning responsive to customer needs is far from a straightforward task. Today, I want to discuss some key demand planning trends and how companies might leverage them to better respond to customer needs and run their business more efficiently.
Utilizing Data, Analytics, and Complex Models to Generate Demand Plans
In days past, reorder points and safety stocks drove demand planning. A planner would generate purchase orders once a SKU dipped below its safety stock or hit its reorder point. However, more than these simple metrics are needed in today’s fast-paced market. Companies often use demand planning tools that generate demand plans based on complex models, including historical sales and market trends. These tools are adjustable by planners and other forecasting roles that can be incorporated into company projections. A few tools in my space (NetSuite) that folks often use are Tooli (assortment and merchandise focused), Blue Ridge, and NetSuite Planning and Budgeting. These tools frequently improve and incorporate AI and other key trends/models. Regardless of your chosen tool, ensure it is responsive and generates new demand plans as sales, purchasing, and manufacturing data flows back into your planning tool and generates complex demand plans.
Connection to Supply Chain
This may go without saying, but the greatest demand plan is only useful if you can execute it. To make use of a demand plan, you must connect it to procurement and manufacturing. The most common process is feeding demand plans into materials requirements planning (MRP). MRP will generate supply plans based on the demand plans and then, in turn, generate purchase orders and work orders. MRP itself is an incredibly powerful and complex tool. Still, for the sake of this blog post, the key element is that as purchase orders and work orders are executed, we m, we must feed data back into MRP so that it updates and lets us know if our supply plan will meet our demand plan. In cases where we risk not being able to meet demand, we want to flag this as early as possible and give our planners options.
Collaboration and Omni-Channel
Collaboration and Omni-Channel, by definition, are not a pair. However, I list these two elements together as they’re crucial to success in demand planning.
Let’s start with collaboration: demand planning touches multiple teams: planning, procurement, and supply chain. Collaboration is required to meet customer needs successfully. However, collaboration as a buzzword is not sufficient. Companies need to employ tools that help foster collaboration. Tools that allow easy hands-off between teams include access to all requisite data, approvals, and processes built systemically into software. Handoffs by email, text message, and Slack don’t cut it anymore.
Now, onto omni-channel. Today’s businesses sell through multiple channels, including retail stores, ecommerce, marketplaces, and wholesale (EDI). Demand planning must account for customer needs across all channels and handle allocations and reservations. This flexibility and scalability is crucial to maximize operational efficiency and profitability.
Demand Planning is crucial to business success, especially in our fast-paced and ever-changing marketplace. Embracing the following trends: Utilizing data, analytics, and complex models to generate demand plans, connection to supply chain, collaboration, and Omni-Channel should help your business improve its demand planning. Adaptive and powerful demand planning will help drive expanding, profitable, and efficient business.
