Some say intuition has no place in business. Yet, you need to be able to sense market trends if you want to proactively move from a reactive operating model into a more opportunistic stance. This is why Demand Planning – or business forecasting – is essential to the survival of supply chain organizations.
However, is it possible to see the future if you only have filtered access to your past? Hindsight is 20/20 – and the only way to gain clear foresight into “what’s next.” In other words, one missing data set can skew Demand Planning forecasts for the next five years. One incorrectly input sales record can produce completely inaccurate inventory forecasts, resulting in either a shortage or surplus. Both of which will cost you a lot of time, money and/or customers. And, we all know that one miscalculation can result in a missed sales opportunity or production deadline, which can lead many organizations to miss their earnings targets and overall performance projections.
As Deloitte has noted: “Many CFOs and COOs today are searching for supply chain planning capabilities that lead to accurate financial forecasts and effective working capital management.”
Now, it may seem challenging to find technologies capable of facilitating a completely accurate planning practice. I realize that not all software marketed for planning applications come equipped with algorithms that align with your typical forecasting needs.
At the same time, not all supply chain planning tools are capable of aggregating data from multiple systems, such as the ERP, WMS and financial systems. Of course, many supply chains are still lacking digital access to historical records, or lagging behind in their implementation of digital planning tools. However, that is no reason to write off forecasting errors as “normal” or revert to spreadsheets or legacy systems.
The fact is, there are software solutions that can facilitate accurate business forecasting. It may just not be the one you’re using right now.
- Can I systematically analyze historical data based on any hierarchy parameters I want/need to use?
- Do I even have 360-degree visibility into my past operational performance?
- Does my software platform recommend the “best fit” forecasting method based on my goals?
- Am I confident in the accuracy of the business forecasts being produced?
- Have I really been able to identify future cost-savings opportunities based on my current tools?
- Am I still having to manually feed in data for each event?
- Are my forecasts often left “open for interpretation”? Or presented in way that’s too complex for anyone other than financial analysts to interpret?
If any of these questions sound familiar, then it’s time to reconsider your Demand Planning methods – and invest in some new tools.
Look for software that:
- Is capable of aggregating supply chain data from multiple, otherwise disparate systems.
- Allows you to forecast at any level of transactional hierarchy.
- Enables you to manage by exception once your hierarchy parameters are defined.
- Can present data graphically or in more customized dashboards / reports.
- Makes it easy for sales organizations to become involved in the planning process.
- Boasts hundreds of business-specific algorithms to facilitate more accurate predictions.
After all, just a marginal improvement in forecast accuracy can provide significant benefits to your organization, including these five commonly promised “payoffs” of today’s best Demand Planning tools:
- Faster planning
- Increased business plan stability
- Improved labor utilization
- Reduced inventory levels
- Improved customer service
Did you know?
It’s easy to introduce more collaborative Demand Planning processes when you have all data flowing through a single supply chain management portal versus many different ERP, WMS and TMS systems.