In the past, demand planning was considered difficult due to the lack of technological software available. As technology has advanced, demand planning has become less complex and easier to understand, which has aided production facilities immensely. As production has ramped up around the globe, demand planning has become more important than ever.
Demand planning is an integral component pertaining to manufacturing operations. Without demand planning, it is much more challenging (almost nearly impossible) to be able to adequately produce an accurate estimate of products within a given time period. This is why improving the accuracy within your demand planning is essential for your operation. Therefore, here are 5 tips on how to improve demand planning accuracy.
5 Tips to Improve Demand Planning Accuracy
The 5 tips to improve demand planning accuracy include the following:
Communicate Assumptions - The first step within the forecasting process includes determining assumptions or starting values. It is essential to take care and derive these values statistically, communicate them, and analyze them. These will be the basis of your forecast quality. Communicating them to team members will provide context for generating any initial forecasting model. Some of these basic assumptions include the number of buyers in the target market, percentage of consumers in the target market that will purchase, timing of purchase, and the pattern of repeat or replacement purchases. Overall, it is important to leverage any collective knowledge and expertise of various teams involved in validating these assumptions before beginning the forecasting process.
Produce a Range of Forecast - Production facilities are able to achieve much broader perspectives for a demand plan by producing a range of forecast. This enables them to be able to recalculate frequently, ultimately allowing them to reflect market conditions, assumption transformations, and probabilities. Besides historical data, you can utilize a demand sensing approach in a more accurate and daily demand plan.
Delay Minimization - Delays are challenging to combat, but there are ways to minimize them. Delays usually happens when market demand is not properly reflected in the supply chain, which can negatively impact forecast accuracy. In order to minimize the impact of delays, utilize a fully integrated supply and demand forecasting model to increase potential adaptability and efficiency within the operation. An integrated demand-supply planning process will also enable your business to respond to market trends in a fast and effective manner, which would otherwise not be possible without the software that is offered today.
Utilize a Variety of Forecasting Methods - When applying a variety of forecasting methods, you can leverage relevant historical and market data. In order to do this, you must choose the most durable and effective model for your market. Then, you much blend the best features and shift between them to generate successful and accurate forecast. One of these examples would be having historical demand be a great starting point for forecasting mature products with a plentiful history. For products that are much newer, maybe consider utilizing advanced techniques such as comparable forecasting. This will utilize historical data from similar products. Overall, utilizing a variety of forecasting methods can be extremely beneficial for improving demand planning within your operation.
Integrated Supply-Demand Forecasting - Supply chain management needs accurate forecasting, as well as sales and operations planning. To improve this accuracy of your demand forecasts, you must employ different models and draw data from a variety of sources. The quicker you are able to pull this data and share forecast the more valuable the information will be for the organization.
Another method to improve your demand planning would be by utilizing an advanced planning and scheduling software. Advanced planning and scheduling software can be a key component within an operation that can increase efficiency within production.
Advanced Planning and Scheduling Software (APS)
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.