The 4 Principles of Demand Planning

Companies fall in two categories vis a vis inventory forecasting, a white paper written exclusively for Cin7 asserts.

One type of company makes forecasting (or demand planning) a top priority to optimise its supply chain management. Another asserts there is no point to predicting the future.

Those who don’t prioritise demand planning make excuses, like “We know forecasts will be wrong” or “Ours is an in which it is impossible to forecast”, writes supply chain expert Keith McNeil in his How to Master Demand Planning paper.

“Yet, most businesses are driven ultimately by a series of planned sales numbers,” he writes.

The goal of demand planning is to move toward perfect order fulfilment with optimal inventory levels. In this paper, McNeil describes the rationale for demand planning, four guiding principles to forecasting, and a process that any organisation can use to make it an indispensable tool. Demand planning is not the fortunetelling exercise that neigh-sayers may have you believe, but properly executed, it is the best educated guess an organisation can make.

“The more accurate that you are able to make your forecasts, the less inventory you will need to cover fluctuations in demand,” McNeil writes. “This in turn allows you to deliver higher customer service, better control of working capital and better profitability.”

Download the guide now: How to Master Demand Planning