The capability of organizations to better their inventory metrics usually peaks with the basic inventory forecasting capability that is offered in their ERP system. While these industry-specific distribution and retail management solutions provide quality inventory control, they can miss the mark when it comes to advanced analytics.
Demand planning software provides real-time inventory analytics to increase forecast accuracy and help your business have just the right amount of inventory on hand. This will help ensure your supply-chain process flows as efficiently as possible and reduce stock-outs.
Demand planning and forecasting software is a sales and operations planning (S&OP) technology that meets customer demand with the necessary level of supply. This is accomplished by coordinating data from separate units of the business (primarily sales, marketing, and operations) to make more informed supply chain decisions.
Accurate demand planning involves collecting historical data on order volumes and inventory turns while mixing it with continually updated forecasts from your sales personnel.
Demand planning solutions can be thought of as a business intelligence tool specifically for supply chain analytics. The software can estimate future sales to improve the accuracy of inventory management and it’s replenishment, better plan purchases, and ensure proper stocking levels.
The goal of demand planning software is to manage your supply chain more effectively to increase inventory turns and fill rates beyond what your ERP system or supply chain management software can do for you.
|Sales and Operations Planning (S&OP)||The overall management of your sales plan and operations plan, which includes tracking sales per month by product family, demand management (such as new product promotions and special offers), production per month by product tracking, workforce and inventory level tracking, and backorder management|
|Demand Planning||Forecast demand for a product so it can be developed and shipped in as efficient of possible of ways|
|Inventory Planning||Identify non-performing inventory SKUs and avoid overstocking. Scale for error to ensure under and over-forecasting situations even each other out.|
|Supplier Management||Helps strategically plan and manage interactions with any vendors or suppliers of goods. Set reminders for reorders and reduce risk in your supply chain.|
Halo as a company provides a self-service supply chain planning solution with data discovery. Their company goal is to help organizations grow revenue and gain a competitive advantage. Their flagship product, Halo BI, is designed to be a BI tool specific to the supply chain industry. Halo has advanced tools such as HaloBoost that provide a machine learning approach to demand forecasting. They also offer SkuBrain, a SaaS-based free-to-start demand planning software tool that has helped them expand into helping retail companies further.
Thrive is specifically catered to multi-location wholesale distributors and retailers. The cloud-based software provides demand forecasting, inventory replenishment, and inventory optimization with a promise to reduce lost sales by 50% (due to lost stock). Specifically, they aim to increase profits for multi-location SKU intensive businesses in high service industries. They provide integrations with most ERP systems.
The sales and operations planning process helps businesses create plans to maintain current business and take on new customers with new products through proper management of the supply chain. The process can help merge together insight from all departments of a business (such as sales, marketing, manufacturing, and more) to create an all-inclusive business plan intended to balance supply and demand. Execution between these departments centered around sales forecasts to make sure goods flowing through your supply chain is as optimized as possible.
The sales and operations planning process is something a business will want to conduct each month in various phases. This includes moving along the following processes:
Inventory optimization is about ensuring proper inventory levels are in place to meet your demand. Inventory optimization software automates the analyses of your entire inventory cycle. An optimized inventory optimization solution will look at the differences between demand forecasts and historical sales data to come up with appropriate stocking levels. An incorrect forecast can lead to your business not being able to meet demand, which leads to product sitting idle, or even worse, that you aren’t able to fulfill sales orders on time.
Effective demand planning software will lead to your inventory being at it’s most optimal level by creating multiple what-if scenarios. This includes analyzing all parts of your supply chain, such as sourcing, production, warehousing, and transportation.
How does one change affect the other? What sort of impact does each change have on various types of inventory? Since inventory optimization can be seen as a form of predictive analytics, demand planning systems will give an accurate prediction to the amount and type of stock to carry.
As demand is the biggest factor used when creating sales forecasts, you’ll want to make sure your business is using the most appropriate type of demand forecasting for the products you manufacture, the market you’re involved with, the staff you have on hand, and more. Most demand planning and scheduling software will use predictive analytics capabilities to determine (to as certain of a possibility as possible) how scheduling, production, inventory, and staffing should be allocated for production. However, there are other methods of demand planning to consider:
Known as being one of the more time-consuming methods of demand planning, the Delphi Method surveys experts anonymously. The surveys are administered in multiple rounds of questions, which each new questions being generated based upon the summary of results received thus far. The end goal of the Delphi Method is to get these experts to arrive at a consensus opinion. In the supply chain process, this consensus opinion is used in development for ideation of new products, which can affect the inventory kept on hand.
This survey-based statistical technique takes into account perceived value and relies heavily on asking customers what they want. This is more of a judgemental approach to demand planning, as the survey planners (the forecasters) will ask the participants to make trade-offs when conflicts arise. If a customer wants product A, will they take product B that has similar benefits/features? In a supply chain, conjoin analysis helps businesses determine the importance of the attributes and price of a product. This can let businesses shift in the features offered or adjust pricing in order to hit certain benchmarks in their overall sales. It can also let them know when a customer may consider buying a competitor’s product over theirs.