What is Demand Planning and its Advantages


Many times in the past I came over these questions. Why should the forecast accuracy be increased? What is the need for wasting funds towards development and implementation of some high demand planning software? Says Jonathon Karelse chief strategy officer of Factors Group of Nutritional Companies Inc.

Jonathon Karelse

To understand the importance of demand planning in Supply Chain Management (SCM), you must understand what a demand planning implies. An essential character of any company, be it the service providing or the producing division, is sales forecasting or demand planning. It is a marketing method that involves futuristic forecasts of demand for commodities and services and maintains balance production and distribution abilities respectively. If you are a member of producing company, then you will be liable for considering demands for the produced commodity and work towards exercises like the supply of raw stuff, distribution and production volume, etc. Being a member of service providing company makes no differentiation, still, you will be responsible for determining the demand for its services and through gear up to service demand.

Jonathon Karelse in his recent interviews said that for any business, demand planning performs a vital role in preparing for several goods including various business roles and needs timely information, specific processing of this information and understanding on joint business strategies along the Supply Chain. Different software is accessible currently which assists in managing efficient demand planning. The most generally utilized is Microsoft Excel, and several ERP products like Oracle, SCM, and SAP products have demand planning functionality incorporated into their set. So let’s understand some of the essential features and characteristics which may be beneficial for businesses in demand planning.

1. Giving Consent Forecast:

It is essential that the demand planning tool which you are using supports consensus planning features. In demand planning, it is needed to consolidate all the forecasts from different areas and specialists, into one projection that portrays the excellent income in the marketplace. The mechanism should be able adequately to efficiently combine the data from all the sources on top of statistically projected numbers.

2. Inventory Goals:

For a company, assumed consumer demands are not the single origin of demands. If you have a backup stock for your product ensures the active running of Supply Chain procedures and security against risk. A company with vast inventory has less risk to their income plan and can be more effective in operations. Despite, the more massive stock can rise in addition to Return-on-Assets and can decrease profit extraordinarily on becoming stopped or out-of-date.

3. An effective Demand Planning technique:

According to Jonathon Karelse, A powerful demand planning device should have the capability to separate and cut down bulk information within a short time and archive old information for a referral without altering the resulting functionality. It should be capable of translating demand of multiple market divisions by business sales and income plan by the utility of characteristics. The chosen tool should be capable of determining the average selling price of the mix goods in the market and foretelling assumed revenue out of it. A device made on information warehousing program can predict information from various dimensions and makes it likely to have mathematical forecasting at multiple levels.




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