While demand planning software is different from demand forecasting software, forecasting is the critical component of the demand planning process. Demand planning is smarter than demand forecasting because it provides a realistic prediction of estimates using qualitative data.
What is demand planning software?
Demand planning is the practice of forecasting the future need for your products using historical sales data to meet customer demand without having a surplus or stock-out. Besides external demand, the demand planning software can also project the internal need for raw material. Its main objective is to balance the sales and operation (S&OP) process. The demand planning software is a useful tool that can help your company manage finance and match inventory levels with an estimated demand level to increase the overall sales profit.
Various factors can affect demand, including weather conditions, economic shifts, and global crisis events. Such forecasting software will enable your company to predict the supply accurately and meet the anticipated demand. Therefore, demand planning software is the foremost tool to manage S&OP operations effectively.
While demand planning software is different from demand forecasting software, forecasting is the critical component of the demand planning process. Demand planning is smarter than demand forecasting because it provides a realistic prediction of estimates using qualitative data.
There are three elements of demand planning: Product portfolio management, statistical forecasting, and product and trade promotion management.
Product portfolio management- This factor is responsible for managing the overall product lifecycle, from introducing a new product until its expiration. It gives a better understanding of how newly launched products will impact the demand for existing products. Product portfolio management will thereby provide estimates to maximize market reach for all your products.
Statistical forecasting- Statistical forecasting implements statistical algorithms to generate supply chain forecasts using past data. In this part, finding the accuracy level of each model and understanding the predictions is essential. You can also determine seasonal shifts using statistical forecasting.
Trade promotion management- Trade promotion is an essential aspect of the retail industry as marketing impacts product sales significantly. The main objective of marketing events is customer engagement. Trade promotions help brands reach the customers, through events such as discounts or giveaways, to increase the popularity of products.
If the product supply isn’t sufficient, businesses lose their customers and revenue, resulting in the loss of the customer to a competitor. Demand planning can help companies understand market demand in advance and make proactive decisions to meet customers’ needs.
Demand Planning Software for Supply Chain Management
Demand planning for the supply chain has gained importance for many businesses, mainly due to digitalized methods. Machine learning applications for supply chain management has been able to provide accurate real-time forecasts. Implementing artificial intelligence for demand planning can help your business cut costs in operations and increase your revenue.
A well-planned supply chain management can drive better results and boost your company’s profitability. The demand planning software uses the past demand patterns to forecast future needs for various elements throughout the supply chain. Using this tool, you can also match inventory levels with anticipated demand levels. Moreover, accurately predicting revenue streams, increasing the product’s profit, and improving the sales and operation (S&OP) process can be managed using demand planning software.
What can demand planning software do for your business?
Provide accurate forecasts – The software involves artificial intelligence technology to drive insights into demand, thereby enhancing supply chain forecasting to obtain precise predictions.
Improve supply chain activities – Enables your business to quickly respond to volatile market conditions and make decisions before they impact your overall business processes.
Enhance scalability – Demand planning software involves advanced computing programs to drive enhanced forecasting that increases your business’s agility to provide an appropriate supply of goods.
Cater to your business needs – Demand planning software is customizable and provides a great understanding of demand at a granular level with complete visibility into key metrics.
Reduces risks – Manages risks of demand planning and forecasting. It tracks real-time demand to enable quick reaction to ups and downs in the supply chain. Customer demand is fulfilled without negatively impacting budget or contracts.
Optimize inventory levels – It helps your business to reduce stockouts and improve inventory management.
There are two techniques to optimize your supply chain: qualitative (survey methods) and quantitative (statistical methods). Both types have positive and negative effects on the supply chain that should be taken into consideration. It is possible to use multiple forecasting methods depending on applications. The qualitative technique is majorly used for short-term demand periods. The three common survey types used are enumeration, sample, and end-use.
There are numerous forecasting techniques available to your organization for the supply chain management. It is essential to understand the available methods and choose the most appropriate one that suits your organizational needs and supply chain process, minimizing the inaccuracies.
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