You do not want a situation when your customer calls only to find you have no sufficient stock levels. That is the last thing you will want. There is a need to do something about your demand planning processes before losing any potential sales.
It is unfortunate that some business owners and managers think that demand planning is some form of magic that works sometimes and, at times, does not work. The truth is that demand forecasting is quite effective when you understand how to apply numerous algorithms and variables for the given situations. The majority of the distributors of the products in industries leverage demand foresting practices to achieve great results.
To make demand forecasting successful, there are different inputs required. These include:
- Historical sales trends – In most cases, the use of a two to five-year period is perfect for most demand planning systems. It is effective in analyzing sales activities.
- Seasonal factors – There is a need to review different products for seasonality. Moreover, you should note whether are factors besides the season that may affect the trend. For instance, could holidays spur sales activities
- Manufacturer Forecasts – Understanding what your supplier trends are can be of great help in this analysis.
- Business Rules or Constraints – You have to consider whether your business buys at a given level to maximize discounts or even reduce freight expenses.
When the inputs are available, you ought to put demand forecasting to work. These are some of the techniques that can help you maximize your results.
Include Customers in the Analysis
It is advisable to receive customer forecasting information and planning to reduce forecast errors and have a predictable demand model. In this case, you need weekly and monthly inputs regarding customer stock planning and even knowing in advance the available promotional opportunities.
Include Suppliers in Analysis
Usually, suppliers and manufacturers have extra information and insights regarding product availability and even new product.
Apply Demand Shaping Techniques
This is a modern approach where you examine demand from a viewpoint and even grouping items into segments with the common demand requirements. You should note that the shaping process can affect downstream supply chain activities and even help you balance your stock. It is advisable to review and compare the demand predictors against reality routinely.
Consider External Influences
Raw material availability, the economy, and other factors ought to be utilized to help with the tuning process.…Continue reading »