Demand planning is kind of like weather forecasting – little credit is given when the forecast is correct, but much notice is taken when it’s wrong. Demand planning is often viewed with disillusionment, resulting in organizational skepticism about the chances of making meaningful improvements to the process.
If the actual almost never equals the plan, why should we sweat the details? According to recent manufacturing industry surveys, on average, companies with more accurate demand forecasting and planning capabilities have less inventory, better perfect-order ratings and shorter cash-to-cash cycle times than others. Further benchmarking reports show that for every 1% improvement in forecast accuracy, companies report a 1-2% drop in inventory levels.
Manufacturers stuck in the past with old-line forecasting methods face limits not only on their profitability and improvement potentials, but also on their opportunities to become more flexible in response to shifting customer demand.
The world of demand planning has changed. Effective demand planning doesn’t just happen, it requires work.
Download our new whitepaper, Demand Planning Across the Enterprise, to learn more about:
- The business case for demand planning
- Characteristics of a successful demand planning and forecasting process in a manufacturing environment
- Demand planning system requirements