5 benefits of using demand planning software

1. Improves forecast accuracy

Demand planning software uses multiple data sources to forecast the future need for products, which can help improve the forecasts. These data sources include previous customer purchasing patterns and trends, customer demographics, seasonal purchasing patterns, marketing and promotional activities and any new product launches.

AI is a key part of demand planning. Machine learning algorithms can analyze the data and do so based on specified scenarios.

Companies use the forecasts to set inventory levels, which will hopefully match supply to demand and maximize product availability.

2. Improves collaboration between supply chain partners

Supply chains are complex, so sharing information is vital. Demand planning helps companies share data with their suppliers, vendors and other partners, which ensures that everyone is working from one set of demand data.

Some demand planning software integrates with systems and business processes across supply chain partners, which makes this collaboration easier to carry out.

3. Increases customer satisfaction

Demand planning software can help improve consumer satisfaction because carrying out demand planning helps ensure product availability.

Demand planning software can help speed up order fulfillment by optimizing warehouse operations, which leads to customers potentially receiving orders more quickly. A better customer experience leads to consumers trusting the company and potentially buying from the company again.

4. Optimizes inventory management

Demand planning software helps companies reduce the cost of carrying inventory because the technology can help companies order the right amount of product instead of over-ordering.

Demand planning software can also monitor existing inventory levels, compare them with forecasts and automatically increase orders if needed. This software capability is particularly valuable for optimizing inventory across multiple locations and warehouses.

5. Helps mitigate risks

Events like extreme weather can affect supply chains, potentially delaying shipments. Demand planning software can identify the need to plan alternative routes so supply chain leaders can pivot quickly.

Demand planning software can also help companies avoid potential risks by tracking supplier performance and ensuring they're meeting their service-level agreements, highlighting any delays in order management or fulfillment, and monitoring any changes in the marketplace.

Paul Maplesden creates comprehensive guides on business, finance and technology topics, with expertise in supply chain and SaaS platforms.