September 1, 2021 | Divya Khare

The ultimate guide to demand sensing

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An effective demand forecasting and planning is the key to longevity of businesses. Looking from a 360 degrees view the complete demand planning process impacts the entire supply chain. 

What is the need to plan demand?

Demand planning is a technique for supply chain management by which businesses analyse the historical data to create a reliable forecast of future demand. This not only allows the businesses to plan the future but also evaluate the success of past decisions. 

Demand sensing enables companies to incorporate detailed short-term data into their forecast to reduce their forecast error by up to 50% while increasing inventory accuracy by up to 20%.

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With demand planning businesses can:

  • Minimize warehousing and inventory
  • Reduce the risk of safety stock
  • Improve the accuracy of revenue 
  • Make decisions informed by data

The quality of forecast is very important because the improvements in forecast accuracy can have a ripple effect. 

Demand forecasting should never be a guessing game

Lean Supply chain management is the application of lean management to the end to end Supply chain. The four major elements of supply chain management are: 

  1. Integration
  2. Operations
  3. Purchasing & Procurement
  4. Distribution

Factors influencing Demand Forecasting

There are several factors that impact demand and it is necessary to keep in mind each one of them as demand forecasting methodology helps avoid overproduction and underproduction.

  • Demand can be seasonal. For example, a highly seasonal brand may have a peak season when sales boom up but this can be followed by an off season time. 
  • Competition is another major factor influencing demand. It is a dynamic concept. The more competitors and product alternatives are present in the market, the harder the demand forecasting becomes.
  • Another factor that influences demand is the price of goods. Even a minute change in the pricing policy can influence the demand process. 
  • Demand can  be affected by technological achievement specifically applied to businesses in the IT sector.

Importance of Demand Planning

Demand planning is gaining traction across verticals, the most important factor to note here is why companies are choosing it. A case-study reports that it helped a company increase the sell-through rate by 18%, reduce inventory cost by 7%, and increase customer re-contracts by 13%. 

If you set the goal to increase your market share by selling specific products, demand forecasting is the key that helps you estimate the demand and see whether your business objectives are realistic or not. Achieving the business objectives and staying on top of your business finances can lead to a profitable business. 

Why Pluto7?

Machine learning is the newest forecasting technique. It’s a software system able to learn from the data you feed to it to deliver insightful demand forecasts. Pluto7 works exclusively on Google Cloud. We know customers have a lot of data available that needs to be studied and used for the betterment of the organisation however, this data lies in Silos. Pluto7 helps the customers enable different Smart Analytics frameworks to unify their data, move it to Google Cloud, and make it ready for AI & ML applications. 

Are you having a hard time figuring out what changed in your forecast? We got you covered! Our AI-Driven demand forecasting solution identifies those forecast items that have a significant deviation and can cause potential problems in your supply chain.  Our Demand ML solution was built to help enterprises forecast with high accuracy while increasing productivity and ROI.

Write to us to know more
marketing@pluto7.com

 

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