Demand management and sales forecast accuracy
Demand management is the process of understanding, forecasting, and planning for customer demand. When it works well, your production, procurement, and inventory are always aligned with what the market actually needs. When it doesn't, you carry too much stock of the wrong things — and not enough of the right ones.
Demand definition
In manufacturing, demand is the signal that drives everything else. It tells you what to make, how much to make, and when to have it ready. The challenge is that demand is rarely stable — it shifts with seasons, promotions, new product launches, and market conditions.
There are several types of demand that manufacturers need to plan for: independent demand (driven directly by customer orders or market signals); dependent demand (derived from production bills of materials); and intermittent or lumpy demand (irregular orders that are difficult to forecast statistically). Each type requires a different planning approach — and the right demand management software should support all of them.
What is demand management in manufacturing?
Demand management is the process of managing customer demand. Essentially, demand management looks at the logistics of demand—what your customers want, and how to get it to them. When you’re managing a business, as we know in sedApta, planning ahead for demand means you can plan for potential bottlenecks and volatility, so you’re able to react more quickly and keep the supply chain in motion.
In the manufacturing process, demand management is often done after supply chain management (when you manage your procurement and suppliers) but before portfolio management (when you build out projects to act on your management plans). Demand management is very cross-functional, because you’re bridging the gap between consumer demand, supply teams, inventory and customer service.
Specifically, demand management means improving the accuracy of sales forecasts; for this reason, the adoption of software tools to support forecasting and production planning activities brings great benefits, such as:
- Improved service level
- Reduced stock and purchasing costs
- Optimized seasonal stock and distribution of production and logistics resources
- Optimized stock levels for each branch and warehouse.
Demand Management Strategy
Demand management strategies refer to the systematic planning and implementation of techniques to influence and control customer demand for a product or service. It involves various methods aimed at aligning demand with the available capacity, resources, and business objectives.
Effective demand management strategies are crucial for businesses to maintain operational efficiency, maximize revenue, minimize costs, and enhance customer satisfaction. They require continuous monitoring, analysis, and adjustment to adapt to changing market dynamics and customer preferences.
sedApta demand management software: key features
Statistical Sales Forecast
Allows time series creation based on survey catalogues that can be configurated thanks to features such as:
- Business event management
- Customized aggregation level of time series
- Dynamic library of analysis algorithms
- Various statistical error measurements
- Automatic calculation functions of the algorithmic best fit for the time series considered with configurable parameters.
Collaborative Sales Forecast
Allows manual data forcing actions at different aggregation levels. Forcing on forecasts allows users to better manage:
- Special events
- Promotions
- Sampling
- Storage and management of special event effects for their rescreening
- Prompt interventions on each data aggregation level
- Forcing on past events to drive the forecast
- Forcing on forecast values
- Trend analysis for the distribution of forced values at high level on lower levels
- Forecasting support for the introduction of new items/areas/customers/markets
- Cloning/editing/mixing of historical values.
See what better planning and scheduling looks like for manufacturers like yours.
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Value creation across the planning horizon
Accurate demand management gives manufacturers better visibility of what customers will need and when — reducing the stock imbalances and reactive purchasing that come from getting the forecast wrong. Find out how sedApta Suite helps planning teams improve forecast accuracy and reduce the cost of demand uncertainty.