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.
Having an accurate demand forecast is crucial as they form the basis of an organization’s production schedule. Forecasts represent the projected demands for a specific item and are not reflective of actual firm demands. Errors and inaccuracies can lead to either overproduction or stock-outs, too much or too little resource capacity, and issues in the timing of the production output. These issues can lead to additional costs and unhappy customers, which are both detrimental to the success of a manufacturing facility’s success.
This is why improving the accuracy within your demand planning is essential for your operation. Therefore, here are some tips on how to improve demand planning accuracy.
Improving Demand Planning Accuracy
- Communicate Assumptions - The first step within the forecasting process includes determining assumptions and communicate them to the team to provide context when generating an initial forecast. Some of these basic assumptions include the number of buyers in the target market, the percentage of consumers in the target that will purchase, the timing of purchasing, and the pattern of repeat purchases made by consumers. It is essential for the manufacturing facility to statistically determine these values, analyze them, and communicate them to the team as they will form the basis of your forecasts. The goal in communicating these assumptions is to leverage any collective knowledge and expertise of various teams to validate these assumptions before beginning the forecasting process.
- Utilize a Variety of Forecasting Methods - In order to improve the accuracy of the demand forecasts, manufacturers should consider applying a variety of forecasting methods. This will allow you to leverage relevant historical and market data to choose the best option for your products. For example, if you are producing a wide variety of products that have different demand cycles, you can choose to use historical demand to forecast mature products that have a plentiful history. For newer products, you may then want to consider utilizing more advanced techniques such as comparable forecasting and use historical data from similar products to generate the forecast for that item. Blending the features and shifting between forecasting methods can be a beneficial tactic to improve demand planning within your operations.
- Use Technology - Modern manufacturers should highly consider using new technology to improve the accuracy of their forecasts. With technological advancements, demand planning software can quickly integrate and analyze multiple sources of information at once to facilitate the forecasting process. Traditional demand planning only looked at the internal data sources such as historical sales data to generate a forecast. Modern softwares are now able to integrate internal and external data sources which greatly improves forecast accuracy.
- Evaluate Forecast Accuracy - One of the most important things you can do to improve your forecast accuracy is to evaluate it. This means comparing the actual demand for products to the predicted demand. If you are new to demand planning and forecasting, you may want to decide to use different forecasting techniques and then evaluate which one is the best for your company. Over time, your forecast accuracy should get closer and closer to the actual demand signals coming in.
Accurate demand forecasting allows companies to be more efficient in their resource allocation and inventory management to minimize waste, inventory carrying costs, and delays. In addition, forecasting helps businesses track their sales, control their production costs, and track the overall performance of the manufacturing process.
Another method to improve your demand planning would be to use an Advanced Planning and Scheduling (APS) software. These types of systems are able to automate much of the forecasting tasks which allows the planners and schedulers to analyze the forecasts and adjust them based on their expertise. PlanetTogether APS is able to automatically generate forecasts based on sales order history for specific items.
With PlanetTogether, we’re able to make strategic decisions that improve operations. We can proactively prepare for anticipated increases or slowdowns in demand.
DICK MARX, MATERIALS MANAGER, KNAPHEIDE TRUCK EQUIPMENT
Advanced planning and scheduling software such as PlanetTogether can be a key component to increase the efficiency within a production facility.
Advanced Planning and Scheduling (APS) Software
Advanced Planning and Scheduling Softwares have become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent. These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency.
With PlanetTogether APS you can:
- Create optimized schedules that balance production efficiency and delivery performance
- Maximize throughput on bottleneck resources to increase revenue
- Synchronize supply with demand to reduce inventories
- Provide company-wide visibility to resource capacity
- Enable scenario data-driven decision making
The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system. APS is a step in the right direction of efficiency and lean manufacturing production enhancement. Try out a free trial or demo!