Why Isn't Your Demand Planning Addressing Forecast Errors?

Why Isn't Your Demand Planning Addressing Forecast Errors?

Planning is a crucial component of demand management. And proper demand planning takes a lot of effort.

Yet no matter how much work you do, errors are still inevitable. But too many errors can lead to serious problems for any organization. If this is something your business is currently experiencing, there is probably room to improve your processes and tools

Within supply chain management, demand planning provides many benefits. More accurate revenue forecasts and inventory levels are two of the major advantages associated with demand planning and management. Accurate forecasts allow you to make smarter, more well-informed decisions for your organization. But if your planning processes aren't functioning effectively, you could be left with more questions than answers.

Triple Point Technology, a commodity management software company, conducted a survey of global companies with revenues ranging from $25 million to more than $50 billion. The survey results showed that for every 1 percent in forecast accuracy improvement, companies reported a 1-2 percent drop in inventory levels, leading to big savings. If that's not enough motivation, the same survey revealed that companies who used advanced demand planning techniques experienced 75 percent forecast accuracy on average, compared to 58 percent accuracy for companies who simply use spreadsheet-based planning processes.

If there seem to be gaps between your forecasts and actuality, you may need to consider investing in a new supply chain management solution. With demand forecasting solutions from SAP HANA, supply chain planning can be made more accurate. Generally speaking, your average inventory carrying costs should be somewhere between 20-30 percent. Accurate demand planning is a useful tool in helping to keep your costs within the desired range. In addition to a more efficient supply chain that aligns with your business objectives, you can experience improved productivity and increased customer satisfaction.

Improved software platforms offered by SAP HANA can also provide you with better flexibility when it comes to managing your supply chain. For example, you can collect internal and external demand streams, analyze the results, and use your analysis to create rational plans that can be updated as needed.

In addition, SAP Forecasting and Replenishment tools can take your inventory management and customer service to the next level. With these resources, you can determine optimal inventory levels and automate their replenishment, delivering more efficient operations and leading to increased profitability. Moving along the supply chain, SAP HANA solutions can also help you integrate planning, scheduling, and dispatching production requirements, which means you can respond to demands faster and adapt to changing conditions with ease. Furthermore, you can also access solutions for transportation management, warehouse management, and logistics.

Without proper processes and tools to help with supply chain management, your organization is missing out on the opportunity to decrease forecast errors, thereby increasing efficiency and revenues. Managing your costs in business is a priority for any organizational leader. While you may have to put in some time and money into an improved supply chain management system, the return on investment includes many long-term benefits for your enterprise.

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