With heightened global competition, it's essential for supply chains to be at their most efficient. This requires an emphasis on agility and speed - reducing any disruptions along the way.

The key to running a successful supply chain lies in predicting the unpredictable and managing what can be controlled. This includes clear communication, having the right teams in place to tackle delays as they come & optimizing for speed & efficiency.

To ensure the smooth running of supply chains, proper planning is key...

Demand Planning Definition

Demand planning is a great way to ensure that your customer's needs are met while keeping excess inventory to a minimum. This system can help improve the efficiency of your supply chain, leading to increased profitability and lower levels of waste.

Supply Chain Planning (SCP) relies heavily on analyzing past data trends to efficiently balance the demand and supply of seasonal products while being flexible enough to quickly accommodate any last-minute changes.

Traditional stores and online vendors both need to make sure they stock seasonal items, as well as those that fit current consumer interests. So they regularly rotate their products to meet the needs of customers.

Sudden fluctuations in product demand can catch retailers off guard, especially if regional stores or departments don't communicate and stay up to date with the news. Without proper communication between all parts of the business there is an increased risk of missing out on valuable information that could be used to anticipate customer trends.

Demand Planning vs Forecasting

When it comes to demand planning and forecasting, the distinction between the two can be quite subtle. Forecasting is basically making predictions based on previous data and trends whereas demand planning is quite a bit more involved.

Demand planning takes into account all components of the supply chain, such as:

• Logistics and distribution solutions

• Seasonality of product offerings

• Unforeseen circumstances (market fluctuations or major global events)

• Labor management

• Regional and national fluctuations in consumer demand

Demand Planning process flow

For optimized demand planning, retailers need a system that can take them through the whole process - from data collection and cleansing to implementing an actionable strategy. When done right, it helps to ensure an efficient and effective use of resources.

This will typically include:

 

Data Collection- To get the most out of demand planning, three years' worth of past transaction and inventory data is necessary. Having this information on hand can help ensure accurate forecasts that enable better decision-making.

With retail analytics solutions, you can easily compile data and gain insight into which products have seasonal or situational trends; those that appear as rare, one-off trends. This data can be collected and scrubbed for reliable results.

Demand Planning- The next step is analyzing the data gathered. This includes looking into past sales figures, items often bought together, seasonal trends; product promotions to better predict your inventory needs.

When creating a demand plan, companies should take into account external factors such as pricing and even environmental elements like the weather. This will help them to accurately forecast customer demand.

Supply Planning- The next step is analyzing the data gathered. This includes looking into past sales figures, items often bought together, seasonal trends & product promotions to better predict your inventory needs. When creating a demand plan, companies should take into account external factors such as pricing and even environmental elements like the weather. This will help them to accurately forecast customer demand.

Executive Meeting- Ultimately, it's necessary to gather for a meeting to evaluate plans, identify any supplier or logistic hiccups and review key operating systems & tools. Additionally, at this stage retailers should define their Key Performance Indicators (KPIs) and ensure everyone is aware of them so that all departments are responsible for their goals.

Demand Forecasting Methods- The future is hard to predict, but that doesn't mean retailers can't plan ahead. A combination of solutions like budgeting & resource management can make it easier for retailers to forecast demand with higher accuracy. By investing in these solutions, they will be better prepared for whatever the future brings.

Boosting forecast accuracy may include:

Using Active & Passive Demand Forecasting

Calculating Short & Long Term Projections

External Forecasting

Market Research

The ‘Delphi’ Method

Demand Planning Tools

Accurate demand forecasting is the key to success for retailers, and it requires quantitative & qualitative data and sophisticated technology that can automate & speed up manual processes which might slow down the efficiency of the supply chain.

Retail analytics software and assortment tools are two tools used to track, analyze, and validate data.

Demand Planning Benefits

Retail success hinges on optimizing a business's supply chain, which is why demand planning offers several advantages.

Demand planning is an invaluable asset for businesses, allowing them to accurately predict their needs. As a result, retailers can efficiently manage their products, stocks, materials, and logistics - leading to increased profitability.

Having a robust demand plan is key to staying competitive in the industry. It also helps to capitalize on any upcoming sales opportunities and make quicker decisions about suppliers, which leads to avoiding the wastage of resources.

Data access has made it much simpler to manage labor resources. This allows merchants to have a more precise idea of where assets need to be deployed and adjust their plans depending on present developments.

Demand planning best practices

Be careful assembling data

Coordinate a strategy

Demand shaping

EDI by Design is here to provide you with the necessary tools & services to plan your demand in an organized manner. Our assortment of data analytics and other tools can be a great help when it comes to demand planning. To find out more about our extensive solutions, click here.