Four Pillars of Demand Planning Excellence
Estimating future demand forecast accuracy is crucial for success yet frustratingly difficult without the proper demand planning software. No other aspect of supply chain optimization has greater impact on business profitability, yet it’s easy to blame a “bad” forecast for poor performance. Providing the best one number forecast requires demand planning software that captures data close to its source and accurately predicts actual demand with enough lead time and confidence to ensure maximum sales and operations performance at minimum cost.
Demand planning software applies science to deliver a better forecast. While forecasts have long been executed using not much more than a spreadsheet and a hunch, leading planning organizations strive for a multi-layered approach that employs a variety of statistical models in an unbiased way to comprehend the many factors that influence demand for products in the marketplace over time. Today companies achieve higher supply chain performance with insightful demand planning software.
This paper outlines four key elements that support effective demand planning and establish fundamental parameters for higher service levels and lower inventory cost. These are the pillars on which competitive advantage and profitability are built:
- Forecast modeling
- Demand aggregation (and disaggregation)
- Management by exception
- Collaboration between internal and external supply chain stakeholders