Demand forecasting pertains to relying on the data that is given to you, which it may be historical or real-time, and enables you to utilize the data to make decisions for your production process. There are various softwares available that are capable of utilizing algorithms and giving you some sort of an idea of what your potential demand may be.
Your data will only be as good as you interpret it, which is why it is important to understand the strengths and limitations of it. With all of this being said, there are four steps/concepts that can aid in driving forecast results. Therefore, here are the five reasons demand forecasting is a must for your business.
Five Reasons Demand Forecasting is a Must for Your Business
Increasing forecasting accuracy within your business is definitely a worthwhile investment to many manufacturing operations. Listed below are the five reasons demand forecasting is a must for your business:
- Customer Satisfaction Increase - Providing customer satisfaction is the goal of every manufacturing operation. Providing customers with the product that they want in a timely manner will increase your customer satisfaction with ease. Demand forecasting can easily aid in achieving this target, especially in orders with short lead-time and on-time delivery.
- Inventory Optimization - When you receive orders with long and varying lead-time, utilizing inventory optimization methods along with demand forecasting can determine the best ordering quantity and time. Repetitive stock-out situations can cause increasing customer dissatisfaction which will eventually lead to losing customers.
- Decrease in Safety Stock Requirement - Demand forecasting analyzes historical data for tend and seasonal patterns. Furthermore, it analyzes the overall change of demand related to external factors like promotion campaign, price change, or other external factors.
- Improving Pricing and Promotion Management - Through incorporation of various factors such as price change and applying several promotion management models, inventory managers can plan ahead the amount or product needed to face the change in demand resulted from external factors. Through testing several what-if scenarios, effective pricing and promotion planning can be achieved to maximize the net revenue.
- Reduction of Nearly-Expiring Product Cost - Without proper demand forecasting, inventory managers struggle with ordering the correct amount of product. This may lead to ordering too much of a product, which leads to the selling of products at a discounted price as the expiration date of the product comes closer. The will cause direct and indirect cost which may include unnecessary storage cost or the possibility of selling with lower price as the expiration date comes closer.
A software that can aid with proper demand forecasting is PlanetTogether’s Advanced Planning and Scheduling Software (APS). Advanced Planning and Scheduling Software (APS) allows manufacturers to have thorough insight into their manufacturing operation with ease and aid areas that are in need of it such as waste, profit, cost, and more. Utilizing an Advanced Planning and Scheduling Software (APS) can easily boost performance within your manufacturing operation and allows you to take your operation to the next level in terms of efficiency.
Advanced Planning and Scheduling Software
Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing operations due to customer demand for increased product mix and fast delivery combined with downward cost pressures. APS can be quickly integrated with a ERP/MRP software to fill gaps where these system lack planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.
- Create optimized schedules balancing production efficiency and delivery performance
- Maximize output on bottleneck resources to increase revenue
- Synchronize supply with demand to reduce inventories
- Provide company-wide visibility to capacity
- Enable scenario data-driven decision making
Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations to the next level of production efficiency, taking advantage of the operational data you already have in your ERP.
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Topics: Demand Forecasting