A critical part of supply chain management is the demand planning stage. Demand planning is the process of your business projecting customer demand to know if you have enough inventory to meet it. This step is crucial in ensuring a balance between your company’s supply and demand.
Demand planning software such as what Blue Ridge Global provides can complete this process for you, ensuring your supply chain balance is not only easier to obtain but accurate and efficient. Let’s learn more about what demand planning is and the benefits
What is Demand Planning?
Before we can break down demand planning’s many benefits, we must first define the job itself. A demand planner’s job is to forecast customer demand – what should the company plan to produce to ensure their customer needs are met. Demand Planners combine data sets from historical sales, retailer or distributor actions, market influences, and other factors that may have an influence on demand, then use this data to forecast customer demand.
The two types of demand planning are unconstrained and constrained demand planning. In the first type, raw demand potential is the focus, so the demand planner won’t factor in possible constraints such as capacity and cash flow. However, in constrained forecasting, these factors are taken into account.
Businesses shouldn’t just choose one or the other when planning for their own forecasts. A combination of both is the best way to give customers the most value and keep supply costs down. This is because demand forecasting helps businesses reduce the amount of inventory on hand in order to meet service targets, therefore reducing costs.
Efficiency
In manufacturing, deadlines are a huge part of every step of the process. However, the manufacturing process becomes confusing and error prone if all parties involved aren’t clear on knowing the correct number of units to make, and which oven may lead to backtracking or wasting time.
When you’re not meeting your deadlines, it affects every part of your supply chain. It can devastate your production schedule and cause immense stress to everyone who must suddenly adapt. Avoid disruptions and disorganization with a proper demand planning process.
Storage
If you find yourself purchasing or storing more inventory than your customers are buying, you may not be planning demand correctly. When you end up in this situation, you are wasting money. Storing inventory is costly, and the more you have, the more it costs. You have to worry about expenses like warehouse utilities, equipment maintenance, and more.
You’ll find that cost savings and efficiencies are just some of the many advantages of demand planning. This process ensures that you purchase and store just the right amount of inventory so that you don’t have extra left over.
Logistics
Transportation costs are another high cost that businesses face. When you know how much product demand there is, you can more easily deploy the right amount of trucks and plan for most effective shipping and distribution. You never want to ship too few goods, as this can cause delays. And if you ship too many, you will have wasted money on your expenses. You need to know precisely what your customers want before you deliver, helping to save money on this step of the process.
Customer Service
Your customers are the lifeblood of your business, and you have a reputation to uphold. However, if your products are never in stock or take too long to arrive, your customers will turn to an alternative company. With demand planning, you will always have enough product to meet your customers’ needs before that happens, keeping their loyalty and letting them spread the word to bring in new customers.
Hiring
If customers are the lifeblood, workers are the backbone of your company, and you need enough to keep the business standing. If you don’t have enough employees, you will face significant delays in your supply chain process, meaning decreased customer satisfaction and costs down the line. You’ll need the proper staff at each level of your supply chain, which is just one of the many benefits of demand planning. Conversely, the system prevents you from having too many workers on board, helping avoid spending excess costs on unneeded wages.
Partner with Blue Ridge Global to Optimize Your Demand Planning Strategy
You must get demand planning down to a science if you want to find success in your business. Fortunately, Blue Ridge Global can help you accomplish your demand planning goals with our state-of-the-art, intelligent software that takes over the process for you. We work with industries across the board to optimize your supply chain, saving you money and improving your customer service. Try a demo of our software, and we’ll show you what we can do together.
