Creating a solid demand plan is crucial to building a thriving business. But all too often, companies flounder when it comes to actually devising and executing that demand plan and end up defaulting to manual, ad-hoc processes. If you’re looking to improve your demand planning capabilities, demand planning software is the way to go. Read on for five ways demand planning software drives value to your business.
It improves forecast accuracy
All along the supply chain, your employees make decisions based on how much demand is forecasted for a product. So any improvement in forecast accuracy will result in a more streamlined supply chain and reduced costs. And this, ultimately, will improve your bottom line. These savings can be significant, too.
According to the Institute of Business Forecasting (IBF), a “one percentage point improvement in under-forecasting error at a $50 million turnover company gives a saving of as much as $1.52 million, and for the same amount of improvement in over-forecasting, $1.28 million.”
Fortunately, a software solution can help you realize those savings by automating calculations, detecting anomalies, automatically determining the best statistical models to use, and much more.
It reduces inventory costs
Improving forecast accuracy brings a ton of ancillary benefits, including a reduction in inventory costs. Because you’re better able to predict demand, you can more accurately determine how much inventory to have on hand. Even better, the software will calculate this for you. Demand planning software also streamlines your replenishment processes. You can set segmentation parameters and policies based on specific product or product group characteristics. Then, at the appropriate time, the software can release the purchase or manufacturing orders
Lastly, look for a software solution with reporting and analytics features. It’ll give you a better understanding of your performance and help identify additional opportunities to implement lean stocking strategies, such as SKU rationalization and postponement.
It minimizes bottlenecks
If you’re like many of our clients were before partnering with us, your current demand planning processes are mostly manual. As a result, you’re probably spending a lot of time waiting for someone to enter the data, crunch the numbers, or come up with a forecast. This is time, and money, wasted.
A solid demand planning software solution automates many of these processes. Data is easily compiled from a variety of sources. Forecasts can be calculated more quickly. And key stakeholders don’t have to wait to take advantage of advanced analytics features. They can slice, dice, and analyze the information in real time.
It facilitates collaboration
Demand planners collaborate with many departments and colleagues along the supply chain to formulate and carry out their company’s demand plan. Unfortunately, emailing back and forth, and perhaps forgetting to copy the right people in the process, doesn’t cut it when so many are involved. Demand planning software provides a way to collect and share information in one central system accessible via the web and mobile devices. In addition, multiple calendars, such as those detailing your manufacturing, shipping, or promotion dates, can be shared easily, widely, and in real time — yet another way to make sure all are on the same page.
It moves you from taking a reactive approach to a predictive, proactive one
Demand planning software with advanced reporting and analytics capabilities makes the entire process more transparent. With the help of data visualization tools, stakeholders can track KPIs and identify trends with interactive charts and graphs. You can then use the data to more easily determine what is and isn’t working with your current approach.
What’s more, you’ll be able to transition from analyzing the past and present to more accurately predicting the future. Quickly evaluate multiple scenarios — for example, what could happen if you were to increase your price per unit, prior to taking action. Then use those insights to further optimize your supply chain.
Demand planning software can seem complicated (and expensive) at first. But in our experience, it’s not just a nice-to-have. Make sure you’re in a position to survive — and even better, thrive — in today’s highly volatile and rapidly changing markets. Schedule a consultation with one of our Forecast Xperts today to learn more about how software like our Atlas Planning Suite can add value to your business.