Demand Planning

The Importance of Demand Planning

Successful demand planning is essential for several reasons, the most important being that it enables a company to adjust its production and save money. With an idea of where future demand levels will be, a business can ensure that its goods will be on the shelves when demand is high. The company will also be able to save money by cutting back production when demand is predicted to be low.

If a customer goes to the store for your product and it is not on the shelf, that customer will pick up a competitor’s product instead. Demand planning is essential in ensuring that situations like this do not happen, therefore keeping current customers loyal to your product. To put it as simply as possible, the goal of demand planning is to find a balance between your inventory and customer demand for your product. The less surplus, the better!

Three Important Aspects of Demand Planning

There are three key concepts you want to look at when starting the demand planning process. The first of these concepts is your product portfolio. This portfolio will include all the products and services that your company offers, as well as data such as return rates and shipping times. Another aspect that you will want to be familiar with is the demand forecast.

This forecast will give you predictions of future demand levels. Being familiar with these predictions will allow you to make changes. The last aspect that holds importance for successful demand planning is a trade promotion. Trade promotion will allow you to connect more easily with existing or potential customers.

The Demand Planning Process

The process of demand planning can be long and drawn out, but the more thorough your process is, the more successful it will be. First, you will want to consider investing in a quality software system. Demand planning software will make it much easier to collect, organize, and compare any data that you have relating to your product. You want to make sure that you have as much data as possible. This will help ensure that you have the most reliable information possible in order to make the best predictions. Visit to learn more.

Now we can put all of our requirements together into an easy-to-follow, step-by-step process that goes a little like this:

  1. Prepare your data. Ensure that you have all the data that you need altogether. A software program will be useful here.
  2. Make your initial demand forecast. It will give you a baseline to work from. Expect this initial forecast to change.
  3. Gather any additional information on external factors. These factors can include natural disasters, economic shifts in the country, or seasonal changes. There will be different factors that can influence your sales depending on what type of product you offer.
  4. Refine your forecast. If you have found any important external factors, it may alter your initial forecast.
  5. Make changes to your supply chain. Depending on your demand forecast, you may need to increase or decrease your production. You may also need to alter other aspects of your supply chain, such as transportation and storage.

After you have completed these steps, you will see a difference in the amount of money that you spend unnecessarily. You may also see a difference in wasted products and time, as well as more satisfied customers.


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