Demand planning software can be an elusive task for many manufacturers, especially when they are faced with the...
unexpected, like a weak economy or unpredictable spikes in demand.
Technology continues to add clarity to the art of demand planning, with the following demand planning tools dubbed must-have technologies for this year.
Plan the future with predictive analytics
Predictive analytics are taking the guesswork out of demand planning.
"Using predictive analytics and models to help drive improvements has been a big chunk of the latest technology advances," said Mark Smith, CEO and EVP of Ventana Research.
Companies often get started with predictive analytics by building or buying data models, according to Badri Devalla, senior principal with Infosys Manufacturing business unit.
"There's a tremendous amount of data in the transaction system," Devalla said. Manufacturers are putting a data model on top of that system, with role-based metrics that direct information to the appropriate people within the manufacturing organization.
For example, a planner might want to see only the demand trend over the past few months to gauge how accurate the forecast was and what it means for sales.
"It's the same metric but different hierarchical components," Devalla said.
Collaborative planning and forecasting: Work together, inside the warehouse or out
Collaboration is becoming the name of the game in supply chain manufacturing, whether it's with partners and suppliers or among internal departments. Leading ERP and supply chain management (SCM) suite vendors have technologies that allow collaborative demand planning.
"Different stakeholders have different perspectives [within an organization]," said Anil Gupta, principal of Applications Marketing Group. "The sales force might forecast the things they think will sell, while marketing looks at promotions and pricing, and finance knows what produces a higher and lower margin."
Collaboration among manufacturers, distributors, suppliers and customers is becoming easier with technologies like software as a service (SaaS) or cloud computing portals. But striking a balance there can be a challenge.
"Collaborative planning and forecasting is supposed to be the elixir," Devalla said. "But when all is said and done, there are limitations. There's only so much each wants to share."
Construction industry manufacturer Simpson Strong-Tie uses an in-house ERP system for collaboration.
"We make our software available to our partners and suppliers," said Eugene Alfaro, global IT operations manager. "Others would do a copy or replication of data to a Web or e-commerce site."
Simpson uses thin client technology to open up limited views of its actual system, which means it's critical that the infrastructure is always up and working well, Alfaro said. Simpson's highly functional internal ERP application also provides real-time access to inventory levels for both employees and partners.
DSRs: Collect demand information at every point for a better view
Tools like demand signal repositories (DSRs) are a shift from standard demand planning processes. DSRs get demand signals from a range of areas: point of sale, distributors, customer order information, and shipments sent out from the distribution center, according to Tim Payne, research director at Gartner.
Traditionally, demand planning software uses a proxy for setting demand -- for example, orders placed or invoice sales, Payne said. But in a DSR, all those demand indicators are combined in one database.
"You can bring the signals together and apply analytics to that," he said. "You run off multiple views of demand and find the best one to use. You can combine pieces and look for patterns."
But using a tool like a DSR requires some measure of technological maturity, according to Payne.
"You can't do those innovative pieces without building a foundation," he said.
Upgrade from Excel to a basic demand planning software tool
There are plenty of manufacturing companies still making the leap from Excel spreadsheets to SCM platforms. A manufacturer using spreadsheets or an ERP system's demand planning functionality might trade up to a supply chain suite to add forecasting and other features or choose a best-of-breed or smaller provider that offers supply chain planning, including demand planning.
"If you've got no integrated forecast or are only using ERP or Excel, moving to one of the basic supply chain planning platforms will usually give you forecast accuracy," Payne said.
SaaS is an option that makes good demand planning more accessible, Smith said. With both cloud and enterprise systems, manufacturers must automate all their points of data integration.
"It's much simpler for midsized organizations to gain these capabilities they couldn't before," he said "They can start inputting numbers and spreadsheet data into the online application."
How can I justify these purchases?
In a tough economy, any software buy can be hard to justify, Smith said. But when making a push for new supply chain and demand planning technology, focus on cost, time and risk reduction. Paying attention to those factors can help justify software purchases.
"If I can shave time off of doing demand planning, I have more time to understand the levels of competition in the marketplace and reduce the risk of screwing up," Smith said.
Ultimately, technology can help manufacturers get a clear and constantly updated view of their products and processes.
"Companies are learning to discern what can be improved and what can't be, and how to respond to that," Payne said. "Demand planning helps, but the output of demand planning is a better forecast. Forecasts are never right. You're just trying to make them less wrong."
About the author: Christine Cignoli is a Boston-based freelance writer who covers IT infrastructures and storage technology. She is a regular contributor to SearchManufacturingERP. Contact her through her website.