Effective demand planning
Focusing on traditional channel-centered silos is a common demand planning mistake that can affect a business’ bottom line. These days, customers use multiple channels for their shopping preferences and these can include both online and brick-and-mortar options. Businesses can better serve their customers by using inventory allocation to expand omnichannel integration.
Supply chains may also want to incorporate demand planning collaborations with all departments including e-commerce, operations, and sales. These departments add valuable insight, which allows the business to track trends, view historical data, and understand their customers’ shopping habits over time. This not only improves how they manage customer relationships but how they handle fulfillment and inventory management.
In addition, effective can help with inventory management to reduce overstocks, stock-outs, and money wasted on storage.
Incorporate both top talent and best of breed software
Many businesses struggle to achieve demand planning excellence. This generally requires a review of people, process, and technology. While some supply chains have upgraded their SCM software and are satisfied with the new capabilities they have achieved, they may not be using state-of-the-art demand planning software. Operational managers may be confused or unsure about how to optimize their processes for excellence as well. Their resources may have been internally grown and may lack supply chain-related degrees or advanced certifications from a program such as .
By hiring talent that specializes in demand forecasting analytics, businesses are better able to leverage demand forecasting software. Investing in talent that understands the demand forecasting process and related advanced technologies should be a priority with operational leaders as a more advanced workforce can help with improving efficiencies and scaling. Businesses may want to consider outsourcing talent to ensure optimal productivity and efficiencies to better interpret forecasting signals and use the probability of demand in their models.
Additionally, for businesses that haven’t started using demand planning software and are still using Excel, leveraging the right technologies can reduce the number of inaccuracies they face while boosting performance and lowering costs.
Consider that the company thought it had $4 million in excess and obsolete (E&O) inventory. It performed a study of this inventory and discovered this figure was actually $44 million as the company had warehouses of forgotten obsolete inventory that it had been storing for 10 years.
For some businesses, the mistake lies in poor inventory management and optimization. When integrated demand and supply planning isn’t in place, they are commonly disconnected, which can create situations like the one above. In addition, if there are delays in shipping and transportation, it can lead to returns, which lower both profits and customer satisfaction.
As supply chains become more complex, organizations need to rethink their fulfillment strategies to ensure their fulfillment requirements are being met by their current networks. Many market leaders are incorporating a multi-echelon inventory optimization (MEIO) software package to address this changing demand.
Additionally, businesses should segment their SKUs into sectioned demand streams to address items such as slow-moving items, fast-moving volume products, promotions, and new product categories.
Ultimately, businesses that leverage best of breed technology, revisit their processes to ensure optimal performance, and hire top talent (while continuing to invest in said talent) will achieve top performance results against their peers.