Knowing the demand trends is one of the most essential things for the success of any business. There are different techniques for analyzing demand trends that help businesses in planning their actions so that they can deliver the best products and services to their customers and give them a better experience. Demand forecasting and demand planning can help businesses improve profitability.
Demand forecasting is the process of predicting future demand trends. It estimates the demand for upcoming products or services. Demand forecasting is done scientifically by analyzing facts and real-time data. Demand forecasting focuses on short-term and long-term demand trends that help businesses in planning their future activities so that they can meet these demands on time without the probability of stock-outs or surplus inventory. Stockouts mean that a business missed the opportunity to make profits with increased sales. Additionally, stockouts also give a bad impression of the brand to the customer and ruin the customer experience. On the other hand, surplus inventory means unnecessary blockage of capital and warehouse. With accurate demand forecasting, these problems can be avoided, and maximizing profits.
While demand forecasting is the exercise to predict what might happen, demand planning is the process of making it happen through correct operations. It is the processing of planning and managing inventory to meet the increase or decrease in demand for a product. The process of inventory planning ensures that the inventory is managed so accurately that there is no wastage or stockouts. It helps maintain a balance between sufficiency and surplus.
Benefits of Demand Forecasting and Planning
When forecasting and planning work together it can yield many benefits to the company. Here we discuss some of the benefits of forecasting and planning demand.
Better Financial Control
Accurate forecasting and data-driven planning can help companies improve cash flow, optimize inventory, and enhance customer experience.
Better Planning of Operations
It is beneficial for companies to plan their operations based on accurate forecasts and well-executed planning. It is easier to optimize labor, capacity, and schedule maintenance correctly.
Better Marketing Strategies
When there are data-driven insights available, it is easier to formulate better marketing strategies. Marketing teams can leverage that information to get target sales and match the demand curve.
Demand Forecasting vs Demand Planning
|Demand Forecasting||Demand Planning|
It is done based on historical and real-time data.
It is done based on the result obtained from forecasting.
It is the process of predicting what is likely to happen.
It involves the planning of the processes to realize the prediction given by forecasting.
It uses different variables to produce of consensus forecast that end users can use.
It takes the forecast and ensures optimized, capacity, inventory levels, and logistics.
Demand Planning is an integral part of business planning and is essential for the optimization of business operations. On the other hand, demand forecasting provides the inputs for the planning process. As technology advances, artificial intelligence and machine learning are becoming more accurate and provide accurate analytics that are helping businesses in enhancing their planning efficiency and overall profitability and sustainability.