What is demand planning?

The goal of demand planning is to ensure that the supply and demand for a product or service are in balance, so as not to create shortages or excesses. This can be done by analysing current market conditions and forecasting future market conditions.

Demand planning involves:

• Identifying the factors affecting demand;
• Analysing these factors to determine their impact on demand;
• Forecasting how these factors will affect demand over time.

What Do Demand Planners Do?

A demand planner is a person who analyses the factors that influence demand and forecasts how they will affect demand in the future.

A demand planner helps companies decide what products and services should be produced and when they should be produced. The demand planner also determines whether there are enough suppliers to meet customer needs.

The Demand Planning Process

The demand planning process may be simple or complex depending on the size of your business and its industry. It usually includes the following steps:

1. Identify the problem
2. Analyse the situation
3. Develop solutions
4. Implement the solution
5. Evaluate the results
6. Repeat steps 1 - 5 until satisfied
7. Document the findings
8. Communicate the findings
9. Review the plan periodically
10. Monitor the progress

 

Where does demand planning fit within the organization?

Demand planning is often confused with marketing strategy. While both strategies focus on understanding customer behavior and predicting what products and services people might want in the future, demand planning focuses on identifying and meeting consumer demands. In addition, it helps organizations anticipate future needs and ensure that their supply chain is ready to meet those needs when, where and how customers want to buy them.

Demand Planners Need A Range Of Skills

The demand planner is responsible for helping companies manage their supply chain efficiently, while ensuring that customers receive the best possible product at the lowest cost. They are often called upon to make decisions regarding pricing, ordering, and distribution. This involves working closely with salespeople, marketing people, finance, operations, logistics, and purchasing.

Common pitfalls that most demand planners face include:

• Lack of data – Without data, there will be little chance of making accurate predictions.
• Poor forecasting skills – Many people do not understand how to make accurate forecasts.
• Inconsistent demand – If demand fluctuates, it becomes much harder to predict.
• Inaccurate demand – Forecasting is often based on inaccurate information.

Demand Planning Manager

A demand planner must have a broad understanding of the market and industry trends, along with knowledge of the customer base. He/she needs to know how to communicate effectively with different groups within the organization. In addition, he/she must be able to think strategically and creatively, and understand how to use analytics to determine the best course of action.

In order to succeed, a demand planner must learn how to balance his/her role as a manager with that of a leader. He/she must be able build relationships with employees across the entire organization, including those in sales, marketing, and manufacturing. Finally, he/she must possess strong communication skills.

A Demand Planner's Tools

A good demand planner should know what he/she does and how to do it well. He/She must be able to use analytical tools such as Excel, SPSS, R, etc., and apply statistical methods to analyse data.

There are many tools available to help you analyze the factors that affect demand. These tools include:

• Market Research
• Customer Surveys
• Sales Forecasts
• Inventory Analysis
• Projections
• Scenarios
• Simulation Models
• Trend Analysis
• Data Mining
• Expert Systems
• Artificial Intelligence

In addition, a good demand planner should understand the basics of supply chain management and logistic optimisation and be able to communicate effectively with his/her colleagues.

Skills That Affect Demand Planner Salaries

Demand planning is one of those jobs where you might think it pays well, but it doesn't always pay what you'd expect. In fact, demand planner salaries vary widely depending on location, experience level, industry and even employer size. Here are some things you should know about demand planners' average salary.

Salary Range

The Bureau of Labor Statistics reports that demand planners earn $58,020-$99,440 annually. This range includes entry-level positions and experienced professionals. Entry-level demand planners make around $50,000 per year while mid-career demand planners earn up to $90,000.

Industry

Demand planners work across many industries including retail, manufacturing, healthcare, construction, transportation, telecommunications and utilities. Some employers specialize in specific sectors such as consumer products, food and beverage, automotive and pharmaceuticals.

There are many different approaches to Demand Planning. Some companies like to work through a spreadsheet, while others like to use a software solution. Demand Planning is all about management and planning. It's not just a forecast.

A Successful Demand Forecasting Strategy

There are many moving parts and inter-connected disciplines and methodologies that must all work in concert during the demand planning process . A successful strategy must consider all of them.

Demand Planning vs Demand Forecasting

The difference between Demand Planning and Demand forecasting is that Demand Planning focuses on the short-term while Demand forecasting looks at the long-term.

In other words, Demand Planning deals with the immediate problems facing a company while Demand forecasting looks at trends and patterns that may occur over longer periods of time. 

Demand Planning and Supply Chain Management

Supply chain management is related to demand planning because both involve managing the flow of goods from supplier to consumer. Demand Planning and Supply Chain Management are different because they focus on different aspects of the same thing.

Demand Planning is concerned with the relationship between demand and supply. It involves analysing the factors influencing demand and developing plans for meeting that demand.

On the other hand, Supply Chain Management is concerned with managing the flow of goods from supplier to retailer. It includes all activities related to moving product through the supply chain.

For example, if you have an inventory shortage, this would cause a disruption in your supply chain. On the other hand, if you have too much inventory, this could lead to a surplus which causes another disruption in your supply chain (e.g., slow delivery).

Demand Planning and Inventory Control

An inventory control system helps companies manage their inventories by ensuring that they always have enough stock to meet current demand. An effective inventory control system can help companies avoid shortages or excesses.

Demand Planners Manage And Grow Demand

The demand planning process involves gathering information about customers' needs and wants, identifying potential suppliers, and developing strategies to satisfy those demands. In addition, it helps companies determine how much inventory they need to meet customer demands and whether there are enough resources to fulfill those demands.

Demand planning is often confused with strategic sourcing, which focuses on finding the best supplier for a particular product or service. Strategic sourcing typically begins with a detailed analysis of current and future market conditions and trends. Companies use this data to identify opportunities for cost savings and revenue growth. They then develop relationships with suppliers based on their ability to provide quality goods and services at competitive prices.

Demand planning differs from strategic sourcing in several ways. First, strategic sourcing usually takes place over a longer period of time, while demand planning occurs during a shorter timeframe. Second, strategic sourcing requires a high level of expertise, whereas demand planning is primarily a function of operational managers. Finally, strategic sourcing is concerned with meeting specific goals such as reducing costs or increasing revenues; demand planning is focused on satisfying customer requirements.

Demand planning is one of the most difficult functions within supply chain management. A lack of accurate data makes it hard to predict future demand accurately. Furthermore, many organizations don't have the necessary skills to perform effective demand planning.

In response to these challenges, demand planners must rely on a variety of tools and techniques to gather and analyze data. These methods include surveys, interviews, focus groups, statistical modeling, and computer simulations. Once the data is collected, demand planners must interpret the results and translate them into actionable insights.

Demand Planning and Logistics Optimisation

The final and perhaps most critical operational aspect of a monthly forecast maintenance model is Logistics Optimisation.

Logistics optimisation involves using mathematical models to determine the best way to move products from one place to another. The goal is to reduce transportation costs and increase customer satisfaction.

Unique Methods for a More Effective Forecast Model

No Matter the skill level of the demand planner without accurate demand forecast data an effective multi-dimensional model cannot be developed or implemented.

As the complexity of an operation grows it soon becomes impossible for any single person to provide any sort of demand forecast accuracy with the use of rudimentary tools such as spreadsheets.

Imagine that there are 100,000 cars of 15 different models that come from 10 different cities and it is your job to decide in real-time what dealership they should be delivered to for maximum sales profit and inventory flow.

It soon becomes obvious that even an army of highly trained (and expensive) demand planners would be faced with an insurmountable challenge. This is especially true with Fast-moving consumer goods (FMCG) where time is of the essence.

This is where an advanced demand planning software must be deployed for effective real-time demand fulfillment.

Multi-Award Winning Suite of AI-Driven Applications

Larry, the Digital Analyst®, is a multi-award winning suite of applications that can be trained to analyse complex demand patterns, market trends and handle inventory estimations on the fly. Larry, the Digital Analyst®, uses machine learning to help businesses plan better.

Machine learning algorithms are used to analyze historical data and make accurate predictions about what might happen next in any fast-paced environment and deliver reliable forecasts and action plans.

This allows businesses to anticipate future needs and prepare accordingly. AI driven Demand Planning provides an easy way to create models based on historical data.

These models can be shared across teams and departments, allowing everyone to collaborate on making accurate forecasts. Demand Planning helps companies improve planning processes and increase accuracy, ultimately helping customers receive better products and services.

Advanced Forecasting

The world of marketing is changing rapidly. Consumers are becoming increasingly tech savvy and demanding more personalised experiences. As a result, marketers must adapt to keep up with consumers’ needs. One way to do this is through advanced forecasting through the use of artificial intelligence.

This type of tool helps companies plan better and improve profitability. These types of tools include demand planning software, such as the Complexica Demand Planner, which allows you to forecast sales and inventory levels based on customer behaviour.

Demand Planning Software

To address this challenge, Complexica has developed a fully-modularised software platform called Decision Cloud® that empowers staff across multiple business functions to make better decisions.

Decision Cloud® is powered by our award-winning Artificial Intelligence engine Larry, the Digital Analyst®, our Supply & Demand Planner can help you:

• Minimize the risk of lost sales due to stock-outs, as well as write-downs due to inventory obsolescence
• Readily adapt inventory to sudden changes in downstream demand or upstream supply
• Optimise planning & scheduling activities, especially in production environments that are heavily constrained or require multi-stage scheduling and frequent re-scheduling
• Dynamically create plans & schedules that are optimised for cost, profit, utilisation, or customer-defined objectives (such as service levels, etc.)
• Go beyond traditional MRP by replenishing using a number of best practice replenishment methodologies
• Collaborate with customers and suppliers on forecasting, promotions, pricing and inventory replenishment through dedicated supplier and customer views

 

To explore how our Supply & Demand Planner can help you optimise your supply chain activities, please contact us