Deciding to use a software application for demand planning, instead of spreadsheets, is a major shift for any company but its essential to longer term growth. Of course, like any big change, there’s a time to do it that makes the most sense. Companies that have fewer than 100 to 150 SKUs, for example, might be able to effectively rely on spreadsheets for supply chain planning, but if your product complexity has grown beyond that , it’s time to look at what software can do for you and the accuracy of your demand planning.
Key benefits of effective demand planning
To name a few:
- Reduction in inventory costs
- Improvement in inventory turns
- Reduction in stockouts
- Improvements in on-time in-full deliveries, without increased freight expense
In order to achieve these benefits, however, the underlying data management and planning systems need to be able to:
- Dynamically collect data from multiple sources
- Offer flexibility in forecasting algorithms with the ability to compare and contrast multiple forecasts (system best fit, sales, customer, etc.), and provide the ability to perform “what-if analysis”
- Serve up custom views of the data depending on the persona. The data might be the same for sales and finance, but the view will likely need to be different
- Provide an automated mechanism to reconcile demand and supply plans and identify gaps and imbalances
Spreadsheets fall short on each of these points which can dramatically hinder your ability to respond quickly to market dynamics, actions of competitors, or disruptions in your supply chain..
Why spreadsheets fall short for demand planning
Beyond the fact that spreadsheets fall short on the processes mentioned above, they can also:
- Be prone to human error.
- Vary widely from business silo to silo because they are held independently by each department, creating data variations between otherwise interdependent business functions. The result is a lack of collaboration that can lead to a failure in planning.
- Make it difficult to aggregate different data sets, limiting analysis of the data and resulting insights.
Why software improves demand planning accuracy
Software clearly provides efficiency and productivity gains over manual spreadsheet manipulation, to say nothing of a reduction in errors, but the benefits go far beyond that and start to add up to having a significant impact on business performance and enhanced ability to compete in a dynamic global market. Here’s just a few ways where demand planning software will save the day:
- With a consistent set of data, viewable by all relevant users, consensus-based demand plans are possible, where no one is questioning the validity or provenance of the data
- Problems—including imbalances between supply and demand—are identified sooner and a course correction can be actioned more quickly. The real-time integration with operations ensures that these decisions can stem from data-driven insights rather than ‘gut’ feelings.
- Opportunities can also be identified more quickly, so that adaptations can take place throughout the supply chain to meet them. With improved data visualization, users can quickly spot changes to demand patterns, trends, and seasonality.
All of this data insight is within reach, creating an improved ability to meet service level expectations for customers, moving from costly reactive responses to agile, proactive planning that enables you to get ahead of the unexpected… and the competition!
