Demand Planning
Where it all starts
Supply chain planning starts with insight into future demand. Whether your company delivers goods from stock or only starts production and procurement when the customer has placed an order, an accurate demand plan helps in making informed decisions about production, procurement, inventory, staffing and required production capacities. A prediction of future demand either drives all production and procurement activities in a make-to-stock environment or is used in a make-to-order or hybrid environment to determine the required internal production capacities and capacities at suppliers so that future customer orders can be delivered in line with agreed lead-times.
Demand Planning process and system requirements
An information system which supports an efficient demand planning process is essential. It starts with gathering historical sales from your ERP system, cleansing this data so that it can serve as input for the generation of the statistical forecast. This statistical forecast (which looks back in time) together with inputs from departments like Sales and Marketing (looking forward in time) are used to come to the agreed or final demand plan. If needed, multiple demand scenario’s (like worst case and best case) can be stored and the demand plan expressed in logistical units (like pieces or tons) can be expressed in a monetary value using the currency and price information in your ERP system to predict the company’s turnover. To help demand planners focus on area’s which need attention, alerts are used to signal these situations. Finally, the agreed demand plan serves as input for the supply planning process.
