Demand planning can get you far. Software can get you farther.
Software companies provide incredible solutions for every growth point under the sun, and luckily for CPG supply chain managers, demand planning is no exception. Often with the help of Artificial Intelligence and Machine Learning, demand planning software automatically makes way for bottom-up demand forecasting, computing data on a humanly impossible scale.
The automation and ease that comes with demand planning software is a welcome departure from how demand planners and supply chain managers have typically built their plans. Historically, there’s only been one demand forecasting method available, and that’s using manual spreadsheets in an attempt to build an accurate demand forecast that reflects true consumer demand. And historically, the manual way takes tons of time, whether it be the time it takes to chase data or do the actual computing—and forecasts often end up saddled with human error.
Any great demand plan brings even greater benefits to a CPG brand, but those benefits have a ceiling when planning is done entirely manually. The sprawling supply chain benefits of effective demand planning can be elevated to even greater heights with a demand planning tool like software.
Below are just some of the benefits that planning and forecasting software can bring to your demand planning system:
Brands likely already have access to the supply chain data they need to build a demand forecast, including historic sales with distributors and retailers, consumption data, cash flow, and more. Demand planning software, however, can do the requisite data science better, faster, and with a larger pool of data than human intelligence alone would be able to handle. Look at it like this: A software-powered demand plan is to a demand forecast as a vending machine is to a bag of Skittles—there are complex processes happening behind the scenes of each, yet all you have to do is push a button to reap the supply chain rewards. Ultimately, demand planning software streamlines and unifies a complicated and manual demand planning process, optimizing the key elements of process, automation, and scale with one fell swoop.
One of the most significant benefits of using demand planning software is that all of the information you need is in one place, creating a single source of truth for your business operations to revolve around. The right demand planning software in particular will allow various teams to understand data in whatever metric they work in, whether it’s dollars, units, MOQs, etc. Teams can also understand actual customer demand from a number of different angles with a few clicks—whether the data is at the distribution or SKU level—and coordinate cross-departmentally. Plus, since everything is in one place and all teams are working from the same platform, your brand can easily streamline its S&OP process.
Demand planning software is relevant to companies of all sizes. It’s a helpful tool for larger teams with more specialized planners to drill down into their supply chain data, and it helps small teams—even if it’s just a planning team of one—take on multiple hats. Especially for small brands, though, planning software does a lot of heavy lifting. It can account for the roles of both demand planner and supply planner, enabling a 5 million dollar company to act like a 50 million dollar company. The efficiencies that come with this capability trickle down into production, ordering, inventory optimization, and so much more.
Insights are the keys to understanding your statistical forecast and uncovering the optimal decision you should make for your business based on it. A great demand planning software can get you those insights better and faster than if you were to unearth them yourself. For example, take error analysis, which is a complex thing to figure out by hand. Software can automatically make sense of the margin of error between AI forecasts and actuals, as well as drill down into the factors that contributed to that difference. Since the ramifications of a single supply chain modification can have a ripple effect across product runs and ship-tos, it’s useful to be able to automatically gain insight into why accuracy would start to drop. In the same vein, software can also automatically discern your products’ demand drivers, which can tell you which factors are powering your sales and why. Better, faster insights mean better, faster business decisions—which translates to money in your pocket saved.
A demand planning software has an uncanny ability to create stability in a time when it seems like there’s anything but. Take Covid, for example: Whether a brand had one year or ten years of historical sales in its back pocket, Covid created some fluctuations that didn’t seem to line up with the rest of the data. Using demand forecasting software, especially software that engages AI and ML technology, an intelligent model can recognize the difference between regular patterns and atypical ones. If the atypical patterns persist and constitute a long-term shift in future demand, the models train on the irregular data—in this case, the Covid data—to regulate forecasts. The models will learn these new data patterns and adjust to them to meet a new normal.
Two traits of demand planning software represent the best of contemporary supply chain technology: automation and time savings. Demand planning software enables brands to automate accurate forecasting processes, achieving higher accuracy than your brand’s demand planners could on their own, all while cutting out tons of manual work. Plus, since your supply chain data is automatically ingested into the system and centralized, you and your team don’t have to spend days and weeks collecting and organizing information. Everything’s already at the tip of your fingers.
In the end, software gives you a better forecast, whether it's a sales forecast or an inventory forecast, in a whole lot less time with nary a forecast error. While brands likely already have access to the data they need for sales forecasting, be it ship-to data or historical sales, the benefits of forecasting demand using software are obvious: Supply chain planning software does the complicated data science better, faster, and with a larger pool of data, giving you visibility into your brand’s actual demand and allowing you to save time and money as you simplify your planning process.
Unioncrate is an AI-powered Supply Chain Planning Platform that gives CPG brands the technology they need to compete and win in a rapidly changing consumer landscape. Our automated demand and supply forecasts deliver unmatched accuracy, collaborative visibility, and actionable intelligence, simplifying a manual-heavy process and slashing hours from your week.