In the world of enterprise resource planning and business software, demand planning tools are software programs that effectively forecast customer demand. This powerful capability allows businesses to plan better for future inventory and production. Demand planning is a common part of supply chain management and execution software systems that are aimed at enhancing how companies serve their customer bases.
In some ways, demand planning is similar to other forms of demand management. One of the key differences is that while other types of demand and supply chain processes control short-term management of customer demand, demand planning is most commonly a long-term feature. It helps decision-makers contemplate the demand that may occur in the future, not the demand that is currently happening at a given time. This helps businesses prepare for upcoming demand by having enough stock on hand. This can lead to an increase in sales, since they’ll be able to meet the demand. To that end, tools for demand planning often involve predictive analytics, or the use of current information to forecast what may happen in the future.
Demand planning is often a particular feature of a greater package for supply chain management and control. Demand planning is considered a part of supply chain management because the raw supplies that come in to company locations are kept to produce the products to deliver to customers when demand occurs. Demand planning can help, because it gives the company a better understanding of what will be ordered in the future.
Some experts describe demand planning as a “multi-step operational supply chain management process” that creates reliable forecasts for company use. Some of the steps of the process involve the aggregation of data for statistical forecasting, processes of confirmation with customers, and the ongoing examination of data to make sure it‘s accurate and gain insights for the long-term.
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Examples of Demand Planning
Many software vendors offer demand planning features within their inventory management packages that show, at a glance, the statistical forecast for demand.
Infor is a big name in ERP that offers “high-level applications” for demand planning. This is in addition to a whole host of other supply chain management tools, many of which are aimed at short-term order fulfillment and tracking.
Other companies with demand forecasting and demand planning features include Infoplus and Slingshot, as well as a Microsoft Dynamics offering that includes a demand planning component.
Many of these tools present the demand planning information through a visual dashboard which makes it more digestible. Various bar and chart graphs show the forecasted demand and when it’s likely to occur. Companies can take significant advantage of this form of business intelligence by using demand forecasting and planning to generate better ROI and better product life cycles.
Generally, modern demand planning tools gather key information from inventory trackers and other sources and produce useful intelligence on demand forecasts. Algorithms help project forecasts from raw data. In some cases, machine learning components built into these programs can more effectively project what kind of demand is likely to occur based on past history.