You may think your sales and operations planning is fairly accurate. You have an idea about customer demand based on what has occurred over the past month and you’ve put the appropriate inventory in place to meet those demands. Unfortunately, we all know that business doesn’t happen on a linear path. Customer demands change. You may land a very large customer with higher expectations. Or your suppliers may not be able to fill their commitments to you for unforeseen reasons. Or your own production and/or distribution capacity is not sufficient to meet customer expectations.
Static monthly forecasts can’t account for these fluctuations. Manual sales forecasts or siloed inventory planning lags behind what is actually occurring. Forecasting without accounting for projected capacity can lead to not enough or too much inventory. Symptoms are expedited shipments, frequent inter-location transfers, shipments delays, and more. The result is unhappy customers because of manual and/or non-coordinated execution, and higher costs.
All of these situations point to one problem with most sales and operations planning: lack of fluidity.
Demand-Driven Sales Forecasting
The key to accurate demand forecasting is looking at what happens to supply when things change, and then account for it. You need to manage your business against demand volatility. A system that allows you to conduct what-if scenarios using different demand pattern models, gives you a robust forecast that forms the baseline for strategic actions, forecasted versus actual comparisons, and day-to-day operational adjustments. Forecasts include factors like revenue, cost, margin, order velocity, order frequency, order accuracy, lead times, average response rates so you get a current snap shot of capacity and what has been promised based on customer demand.
Proactive Inventory Planning and Resource Optimization
Do you have enough inventory to meet your demand plans? Or do you have lot more inventory than you really need? These are the questions you most need answered when it comes to forecasting. Your forecasts should account for reorder points and lead times required at each point in your supply chain to avoid carrying inventory that is over or under required levels. Stay on course by basing your plans on customer service level objectives, supplier lead times, and a multitude of safety stock models. A system that helps you identify short and long-term capacity shortfalls and bottlenecks with inputs from actual and planned orders, leads to proactive strategic and tactical production and distribution decisions.
Cloud-based Advanced Supply Chain Planning
What’s the best way to conduct complex sales and operations planning across your entire business? In the cloud. A single version of your supply chain plan maintained in the cloud replaces inefficient and unreliable Excel-based planning—without adding IT infrastructure. You also gain unlimited scalability as your business grows. See it for yourself! Sign up for a DemandCaster S&OP product demo. No strings attached.