Keeping up with product demand is crucial. If you don’t, it can seriously hurt your sales and lead to lost customers. That’s why demand planning is so important.
In this article, we’ll break down demand planning in detail—what it means, the benefits it brings, and how to get started.
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What is Demand Planning?
Demand planning is the process of figuring out how much of a product or service people are going to want. By doing this, businesses can streamline production and delivery, making sure customers are happy. It’s a key part of the supply chain planning process.
Supply chain planning is a key part of supply chain management. It starts with figuring out what products are needed, considering things like storage, marketing, and getting products to the right spots to meet expected demand.
Why is Demand Planning Important for Business?
Good demand planning brings a bunch of benefits to both businesses and customers. The main goal is to keep a balance between having enough inventory and meeting what consumers want.
If a business has too many products sitting in the warehouse, storage costs can really add up. Plus, items that don’t sell fast enough might become outdated and have to be sold at a loss.
On the other hand, if there aren’t enough products or they run out, a business could miss out on extra sales by not fulfilling all customer requests.
Benefits of Demand Planning for Business
Demand planning helps businesses figure out how much to produce, so they can avoid having too much or too little when demand spikes or drops. This means more sales and better revenue.
Here are some of the key benefits of demand planning for businesses:
Increase efficiency
With solid demand planning, businesses can stay organized and avoid chaos, especially in manufacturing. This industry really needs to hit deadlines, and missing them can mess up the whole supply chain.
Also, if everyone involved doesn’t have a clear idea of how many units need to be made, it’s easy for mistakes to happen in the production process.
Save on storage costs
Like we talked about earlier, if a business has too many products just sitting in the warehouse, it’s going to rack up some serious costs. Storing stuff isn’t cheap, and the more you have, the higher those costs get.
These expenses include things like utility bills for the warehouse and equipment maintenance. So, the goal of demand planning is to keep just the right amount of stock, avoiding any excess that could drive up costs.
Effective distribution
Another perk of demand planning is smooth product delivery. When businesses do it right, they can figure out how many products they need, making it easier to manage their trucks or cars and plan the best delivery routes.
This helps avoid situations where they ship too few products, causing delays, or send out too many, which just wastes money.
Increase consumer satisfaction
With good demand planning, businesses can make sure products are available when customers want them, boosting customer satisfaction. If they don’t plan properly and a product isn’t in stock when someone wants to buy it, or it takes forever to restock customers are likely to head over to a competitor instead.
How to Do Demand Planning
Demand planning can be a bit tricky, and it usually involves a few key steps:
Data collection
First off, you need to gather all the relevant data for your predictions and planning. This data can come from inside the company or from outside sources, like third parties.
Prepare statistical forecasts
Once you’ve got all the data, it’s time to pick the best prediction model and start forecasting. It’s usually way easier to do this with demand planning software, but some companies still rely on Excel, which tends to take a lot of time and is prone to mistakes.
Review demand forecast
The next step is to review and analyze the results of demand planning with all relevant parties. Include the most recent data if it is thought to influence the estimate. Question any information that may be inaccurate. Be sure to double-check and ensure that demand planning matches the company’s overall financial forecast.
Determine inventory
Businesses need to determine the amount of inventory needed, including reserve inventory. They must also ensure that their vendors deliver the required products or materials according to the required schedule.
Assessing the effectiveness of demand planning
Businesses determine key performance indicators (KPI) to measure the effectiveness of demand planning and set targets for each KPI. Businesses should also continually review target performance from demand planning and make adjustments if necessary.
Demand Planning Analysis Made Easy with LOKASI Intelligence
Demand planning analysis can be done easily with the right software, and LOKASI Intelligence is one great option for businesses.
LOKASI is a geospatial analytics and location intelligence platform that helps businesses figure out which products are selling best at each of their locations.
With this information, companies can craft strategies to meet customer demand, avoid overstock or shortage situations, and boost their revenue.
Want to learn more about how LOKASI Intelligence can help your business? You can contact us at [email protected] or message us on WhatsApp at 087779077750.
FAQs
What’s demand planning?
Demand planning is all about estimating how much of a product or service people will want. This helps ensure that production and delivery run smoothly, keeping customers happy. It’s a key step in supply chain planning.
What does demand mean?
In Indonesian, “demand” translates to “request.” In business terms, it refers to how much a consumer wants to buy a product or service at different prices.
What’s demand management?
Demand management is a way for businesses to balance what customers want with their ability to deliver. It helps make sure that supply meets demand effectively.
