Ever think you might be losing money on bad inventory decisions?
Supply chain issues are costing the average firm 8% of their annual revenue. That’s a huge chunk of your profits. And here’s the crazy part…
In most cases, this kind of loss can be avoided with better demand planning.
Look, there’s no arguing it. It’s simple. The old, by-gut-feeling sales forecasting approach just isn’t going to work anymore. The market moves too quickly. The customer is too erratic. And if you’re working with Excel and a calculator, you’ll never catch up.
The good news is this.
Today’s modern demand planning software enhanced with AI is game changing. It’s allowing businesses to forecast demand with far more accuracy than ever before. Eliminate waste. Save costs. Agile your supply chain. What companies are doing today is going far beyond what we used to have.
In this post, you’re going to learn exactly how modern demand planning solutions work, how they can be used to transform your supply chain efficiency and help you make better business decisions.
Jump To
- What Is A Modern Demand Planning Solution?
- Traditional Planning Is Holding You Back How to Stop Relying on Outdated Techniques
- Artificial Intelligence and Machine Learning
- Features of a Better Planning Solution
- Make The Transition
What Is A Modern Demand Planning Solution?
In the broadest possible terms, demand planning solutions are all the tools you use to figure out what customers will want and when they will want it.
Simple. Right? Okay, maybe not so much.
These days, demand planning goes far beyond just looking at last year’s sales figures. Sophisticated systems are analyzing hundreds of data points in real time to give you a more accurate forecast. This includes things like market trends, seasonal shifts, economic indicators, and weather.
Here’s the thing…
The gap between forward-thinking companies that use advanced demand planning tools and those using old-school methods is widening day by day. Companies that use demand planning solutions are able to pivot and adapt to change in mere hours. Meanwhile, companies still working without these tools are likely to take weeks.
Traditional Planning Is Holding You Back
Alright, I’m going to ask you something.
Are you still using spreadsheets for your demand forecasting? If you are, you’re far from alone. In fact, three-quarters of retailers still use nothing more advanced than Excel.
The problem is this:
Spreadsheets are manual, time-consuming and susceptible to human error. By the time you’ve finished your analysis the data is outdated and irrelevant.
Traditional forecasting methods also struggle when it comes to handling volatile or erratic demand patterns. They’re good enough when conditions are stable. But they fall apart when there are market shifts and changes. And, these days, rapid change is the new normal.
Think about it…
Your competitors are investing in tools that put them a level above you. You, on the other hand, are sitting there busy working on your Excel formulas. This is no longer competitive.
Artificial Intelligence and Machine Learning
Okay, now for the really interesting part.
Artificial intelligence is helping companies improve their approach to demand planning. Systems that incorporate AI can process large volumes of data and find patterns that would be otherwise invisible to the human eye.
The results are self-evident. Firms using AI-driven demand planning reduce forecasting errors by up to 50% and loss of sales by up to 65%. These aren’t small margins – these are game changers.
Best of all…
AI systems get better with time. The more data that is fed through, the better they get at making predictions. This means that the accuracy of your forecasting can only improve without any additional effort.
Machine learning algorithms can also consider multiple variables at once. AI-powered forecasting can take into account things like promotional activities, competitor pricing, social media trends, and macroeconomic indicators, all at the same time. This means you have a much clearer picture of future demand.
Features of a Better Planning Solution
As you can imagine, not all demand planning solutions are made equal.
As you consider your options when it comes to using new technologies, there are a few key features that you must have to really make a difference for your organization. Here’s what they are…
A good demand planning solution must have real-time data integration. This means it must be able to continuously gather data from a variety of sources. This includes sales figures, inventory levels, supplier information, and market data.
Advanced analytics are the differentiator between tools that are good, and those that are truly game-changers. Look for systems that leverage statistical modeling, machine learning, and predictive analytics. These are the kinds of things that help you to understand not just what is going to happen, but why it is going to happen.
Scenario planning is another essential feature. You must be able to consider what-if scenarios and quickly see how this changes things for your supply chain. What if a supplier is late delivering? How does this affect inventory levels? What impact does a particular promotion have on forecast demand? These are the kinds of questions that a good planning tool can answer on the fly.
Collaboration is also key.
A good demand planning solution should make it easier for teams and departments to collaborate on forecasting and planning. Sales, marketing, operations and finance – all need to be involved in the process. Your tool should bring all these people and departments onto the same page.
Make The Transition
I know, change is scary.
But sitting on your hands and refusing to move with the times is a bigger risk than making the leap and doing something about it. Every day you hesitate is more money you’re wasting on excess stock, stockouts and lost opportunities.
As I mentioned at the start of the article, modern demand planning solutions are created with rapid deployment in mind. Most businesses can be up and running in a matter of weeks. You should see an ROI within a couple of quarters.
My advice?
Get a clear and accurate picture of your current process. Identify where the most costly problems occur. What areas are costing you the most money? Which forecasts are regularly way off? Which activities are the most time consuming?
Then, go hunting for tools and solutions that are designed to address the things you have identified as causing you the most pain. There’s no need to try and fix everything at once. Start with your top-priority issues and then work on others over time.
And don’t worry if your data isn’t perfect to begin with. AI systems work with real-world messy data, and one of their roles is to help you clean it and improve its quality as you go forward.
Wrapping This Up
Tools to aid your demand planning are no longer a luxury, but a business-critical necessity.
Working in the same old way will leave you operating by the seat of your pants, and constantly reacting to problems after they occur. Modern demand planning solutions put you in the driving seat. They give you the visibility and accuracy you need to make informed decisions with confidence.
The companies that are winning out in today’s marketplace are those that are investing in better demand planning tools and technologies. They are using AI-powered tools to forecast demand more accurately. They’re able to save on costs and respond to changes far more quickly than those who haven’t.
So here’s the challenge I want you to take away from this:
Sit down and really look at your current demand planning process and be brutally honest about what’s working well for you, and what isn’t. Start exploring modern solutions to help you address those areas where you are losing money.
