Why is it important to start implementing S&OP with Demand Planning?

One of the key steps in the Sales and Operations Planning (S&OP) process is Demand Planning. Starting the implementation of S&OP with this step has many benefits and allows you to build a solid foundation for the entire process.

The role of Demand Planning in S&OP
Demand Planning is the process of forecasting future demand for products or services, which is based on analysis of historical data, current market trends and information from sales and marketing departments. Its main objective is to create accurate demand forecasts that will form the basis for further S&OP activities.

Benefits of starting with Demand Planning

1. Better demand forecasts
   Starting with Demand Planning allows a company to create accurate demand forecasts that take into account both historical data, changing market factors (e.g. seasonality or competitor actions), customer buying forecasts and expert knowledge. This enables the company to more effectively align its operational activities with actual customer needs.
2. Reducing risk in the supply chain
   Accurate demand forecasts help minimise the risks associated with overstocking or product shortages. Companies can better manage their inventories and avoid situations where costly corrective actions, such as express deliveries or sell-outs, are required.
3. Resource optimisation
   With Demand Planning, an organisation can make efficient use of its production and logistics resources. Accurate planning avoids wastage of raw materials and optimises capacity utilisation.
4. Improving cooperation between departments
   Demand Planning requires collaboration between different functions within a company. This process integrates these departments around a common goal, which improves communication and eliminates conflicts of interest.
5. Basis for subsequent phases of S&OP
   Robust demand forecasts are crucial for subsequent phases of S&OP, such as supply planning and production scheduling. Without accurate Demand Planning, further stages of the process can be less efficient and prone to errors.

How to start implementing Demand Planning?

• Data collection: A key step is the collection of historical sales data and market information, including directly from customers.
• AI-based statistical analysis: The use of AI-based data analysis tools makes it possible to make predictions based not only on trends or seasonality, but also on macroeconomic data, weather etc.
• Interdepartmental cooperation: Regular meetings with representatives from sales, marketing, production, purchasing and finance enable different perspectives to be included in the planning process.
• Monitoring and adaptation: Forecasts should be regularly updated based on changing market conditions and actual results.

Summary
Starting the implementation of S&OP with Demand Planning is a strategic step that provides the company with a solid foundation for further development of the process. With accurate demand forecasts, the organisation can better manage its resources, minimise risks in the supply chain and improve collaboration between departments. This ultimately leads to increased operational efficiency and improved financial performance for the company.

DATURE ENTERPRISE software uses artificial intelligence and machine learning in the process of demand forecasting and inventory optimization. The Dature system allows information about the supply chain to be collected and analysed and used to calculate optimal stock control parameters dal various scenarios of supply chain constraints and costs. The system provides indicators that measure the effectiveness of stock management from various points of view, enabling a proper assessment of the current and future situation of the company.

The system provides methods for forecasting seasonal demand and demand influenced by calendar days. Inventory management methods allow for both pre-season inventory building approaches, dynamic safety stock control and JIT.

TheDATURE application ENTERPRISE can also use expertise in the demand forecasting process. Authorized users can enter expert forecasts and adjust statistical forecasts with them. The process is fully auditable in terms of who changed the forecast when and how. This makes it possible to track the accuracy of both statistical and expert forecasts. As a result, the organization learns how to forecast more accurately and improve process efficiency.