Align Sale and Purchase with Accurate Demand Planning and Forecasting

1. Align Sale and Purchase with Accurate Demand Planning and Forecasting Demand planning is a vital operation in the supply chain that forecast demand in the supply chain management process so that products can be delivered to customers when required. It is the process of forecasting or predicting the demand for products to ensure their delivery among customers. The basic objective is to strike a balance between having sufficient inventory and meeting customer needs without having a surplus. The demand gets influenced because of labor force changes, severe weather conditions, economic shifts, global crisis events, or natural disasters. Demand planning and forecasting is a way through which businesses formulate a plan to strike a balance between the stocks in hand, stock demand among customers, and efficiently delivering the stock to customers. It ensures that businesses never have more stock or run out of stock to cater to their customers' demands. Demand planning is vital for businesses because if the product is not available due to being out of stock for customers to purchase, then businesses may lose revenue or even lose their customers. On the contrary, surplus inventory or unused inventory unnecessarily takes up space and production costs. Thus, with proper demand planning businesses can stay at the forefront and make more productive decisions and they will also be responsive to their customers' needs. Demand planning and forecasting are about processes, technology, and people, and the main key aspects of demand planning and forecasting comprises selecting the right model, apt use of the technology, understanding the forecast performance, and managing demand planning and forecasting processes. When demand planning and forecasting is precise, it serves companies with the following benefits:

2. Better Control on Finances - With data-driven demand planning and accurate forecasting companies can optimize inventories, improve cash flow, and meet customer demand on a just-in- time basis. Reduces excess storage costs - When demand planning and forecasting are not effectively done, then the company may purchase and store more inventory than required or demanded by their customers. This leads to a waste of money because storing excess or surplus stocks or goods lead to high storage costs. However, with accurate demand planning and forecasting companies will only purchase and store the right amount of stock to meet their customers’ demands. Increases Supply Chain Efficiency– Demand planning and forecasting predict the future sales volume of the business over a specific period. Besides, it also helps businesses understand the sales timing and seasonal trends that allow them to schedule diverse aspects of the supply chain such as production, warehousing, and shipping. If the forecast reveals a surge in demand, businesses can intimate their suppliers to supply more stock so that they meet the increased demand. Develop a Pricing Strategy– With accurate demand planning and forecasting, businesses have a clear idea of the demand for their product or services that help them to aptly price them. For example, if a company has a surplus stock of a product and is newer model is coming into the market, and then the company can reduce the price of the product to quickly sell out the product and make space for the newer model.