In an ever-changing demand landscape, it can seem impossible at times to get ahead of the curve and stay on top of demand. With so many factors and moving parts at play, future demand seems like it can change arbitrarily. But in reality, demand is the culmination of deeply patterned data—and while you can never truly read consumers’ minds, there’s technology out there that can get pretty close.
The technology in question? Demand planning software, which ultimately gives your business visibility into customer demand patterns so you can generate a high demand forecast accuracy and better predict your customers’ long-term needs. The most cutting-edge CPG brands implement demand planning software to plan and manage supply chain operations, from forecasting demand for their products to knowing the right materials needed to fulfill their needs.
Ultimately, software is what takes a business to the next level.
As you’ve moved through the CPG industry, your natural intelligence has gotten you far: It’s led you and your colleagues to found a CPG brand, build a team, and consistently put out the best products possible. But of course, the human mind has limitations, particularly when it comes to demand forecasting (and demand forecasting accuracy). Forecasting software is the only thing that can understand what seems like a sea of data in an advanced, mathematical way, which is key to cultivating your brand’s growth.
Most of the time, demand planning software has one chief output: a forecast, which tells you how much of your product needs to be at a certain location, and when. Sales forecasting is all about fulfilling orders appropriately at the finished goods level, which involves demand sensing and collecting preemptive information on sales, seasonality, historicals, intermittent demand, and overall trends, allowing brands to get those finished goods to the right place at the right time. One great thing about having forecasting software on board is that it ingests all of your data and automatically establishes a baseline accuracy level, which is especially important for younger brands that didn’t already have one. Essentially, forecasting software raises your supply chain planning maturity so you can create an optimized planning process for your organization.
A supply forecast is the other side of the same coin, and it's all about inventory forecasting and predicting how many raws and components you’ll need to manufacture the finished product. These forecasts start with your sales forecasts—in other words, your finished goods forecasts—and trickle them down, giving suggestions on what you should order for materials by warehouse and distribution. Inventory forecasting, especially with software, is particularly important because oftentimes, CPG-ers perceive inventory levels as driving sales, resulting in manufacturing too much or too little product. The reality is exactly the opposite: Sales drive inventory, and supply forecasts can help with that, reducing excess inventory and other supply chain hiccups.
On top of providing hard numbers in the form of a forecast and accuracy statistics, a software-based demand planning solution also gives you a better understanding of your entire supply chain, allowing you to optimize your business practices in a holistic way. With software, you can get all departments on the same page with one centralized source of truth that gives you your forecasts automatically, eliminating countless S&OP meetings trying to plan each department's objectives.
Now that you understand the power and significance of demand planning software, it’s time to think about implementing it in your CPG brand's operations planning, whether it be your demand management, inventory management, capacity planning, or supply planning. The question now is, how do you go about choosing software? If there were software out there that would suit 100% of your needs regardless of the size of your brand, what would it be able to do for you? Consider the following questions:
What kinds of forecasts do you need? There are sales forecasts, and then there are supply forecasts—and very few platforms do both. For a sales plan, your forecast hinges on the decisions of the buyers (DCs, large retailers, etc), whereas supply forecasts are mostly based on bills of materials, providing insight into how many raws you need to order and to where. Figure out if it’s more important for your brand to have both forecasts or just a sales forecast, and pick your software accordingly.
Would your brand benefit from industry-specific software? A lot of demand planning software is exactly that: for demand planning... in the most general sense of the term. Consider if your forecasts would benefit from an industry-tailored software, one that optimizes models specifically for your industry. Using industry-specific data aligns consumer buying patterns with corporate ones, resulting in an overall better, more accurate forecast.
Will the planning software be used by itself or in conjunction with another SCM system? Demand planning software—management software of any kind, really—can get a bad rap, specifically in terms of how long and arduous the onboarding process can be. Consider how much time you could reasonably allocate to onboarding, how many team members would need to adopt the software, and whether or not the software in question would be able to “sit on top of” your existing systems, such as an ERP, without interrupting them. Ideally, the software would be able to fully integrate with your ERP.
How much do you need to collaborate with your colleagues for demand planning? As a general rule, it’s far better to break information silos than to build them—but it’s still important to assess how much cross-departmental collaboration is required for your supply chain planning, and whether or not the software in question services that. How much visibility do you need into what other teams are doing, and will your software boost that visibility? Will being able to see your data in different metrics and in levels of granularity help facilitate collaboration? Will you be able to adjust forecasts to factor in information that only certain teams have exposure to? It’s all worth considering.
From the list above, it’s clear that the ideal demand planning software provides as many insights and capabilities as possible. What the very best software has on top of that, though, is the following:
Since the supply chain and CPG consumer landscapes are constantly changing, it’s monumentally important that your software can respond to and build around factors you may not have seen coming initially. The right demand planning software will deploy contemporary technologies like Artificial Intelligence (AI) and Machine Learning (ML) to iterate on data points, ensuring that the algorithms used to create your forecasts are optimized. This also makes room to augment AI-generated forecasts with one-time inputs that only human intelligence has insight into. The right software will take the hundreds of millions of data points it has ingested and iterate on them to create a holistic understanding of your CPG business, whether your brand is bringing in $5M or $500M. After all, how do you build a better demand planning process if you’re not iterating on it for continuous improvement, just as you iterate on your brand’s flavors, packaging and more?
The right demand planning software doesn’t just give you the hard numbers but also the ability to easily understand them and what they mean for your business. A better demand planning software experience starts with a sleek, streamlined UI, which takes all of the messiness of data analysis, puts it all in one place, and structures it in an easy-to-visualize way. Granularity is also a major component of visibility. With granularity, you can view your data down to the SKU level and play with it, sorting it by brand, customer, ship-to, product, and more—all in any time series you like. In this case, the visibility factor of the right demand planning software creates value completely separately from the forecasts.
Collecting, ingesting, and cleaning data is difficult enough, but once you have all of it in front of you, what are you supposed to do with it? The ideal demand planning software comes with a team of data scientists supporting it who are highly trained in data analysis—much more than the average CPG founder. Ultimately, the DS team working for the software automates the little particularities of effective demand planning that you don’t have the time for, and they know which signals, patterns, trends, and supply chain shifts to look out for. As a result, the software’s DS team makes sure the models your brand is using are the absolute right ones for your business. When you buy software, you’re ultimately paying for expertise—both from machines and from the people who build them.
Software is the key for a supply chain planning process that rises above all others. Whether it’s your supply plan or demand plan that needs work, software is an asset that can push it to the next level. Choose the right one, and your demand planning will be as good as gold.
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.