The crucial requirement for every market is demand. If you don't understand this, you don't have a business. This is where demand planning software walks in. However, the market is saturated with software's with countless tools that don’t provide you with any value. For businesses, it’s challenging to know what the right demand planning software is.
What Is Demand Planning Software?
Demand Planning Software is software that helps companies with forecasting solutions, allowing them to create more accurate plans for the future.
It helps companies maintain inventory and avoid getting stuck in situations like understocking or overstocking. This software makes it easier to study a company’s historical data, current and future trends, and economic and market-oriented conditions to increase the opportunity to meet consumer demand. While demand forecasting only helps with predictions, demand planning, on the other hand, is a comprehensive tool where it uses forecasting insights for better sales prediction and management.
Importance Of Demand Planning Software KPIs
Following current trends and constant changes in market conditions, successful demand planning needs real-time data and accurate forecasting. Demand planning KPIs are tailor-made indicators to help you navigate your company's data and use it for more profits and savings. This way, demand planning helps decision makers to forecast accuracy on the track. Demand planning KPIs are crucial because they affect the whole supply chain management. For instance, if any product is underperforming for a specific period, then a KPI can trigger an alert so that you can initiate a flash sale of that product to meet the sales targets. Also, if any product is overselling in the market, then a KPI can indicate an increase in the production of that product is necessary.
Fault-Finding KPIs For Demand Planning Software
There are various types of KPIs according to the business requirements. Some businesses need an army of KPIs for their forecasting optimization, whereas others want only a few options. Regardless of how many KPIs a business needs, almost every business requires at least some basic KPIs. Here are a few.
Forecast Accuracy
Forecasting accuracy looks at the big picture. This KPI shows you how your sales and demands are performing. In this tool, different types of stimulations will be there according to the well-matured product and the new products. The more accuracy you have in your supply chain management more will be the profits for your pocket.
Tracking Signals
This is another necessary KPI in demand planning software. Just like any other dynamic system, many variables are normally distributed. This KPI signals demand planners usually when an error occurs in forecasting. This way, it acts as an indicator or outlier in the market.
(Bias) Mean Forecast Error
Mean forecast error, aka bias, help planners comprehensively understand the bias within the demand forecasting model. The primary key is to look for errors that tend to flow in only one direction. Once pinpointed, then the demand planners can make the necessary changes to eliminate the bias and improve the overall quality of the forecast.
Before Time Warning Indicator for Demand Variation
This concept allows demand planners to observe any minuscule changes in the forecasting pattern of a product and take the most needed action. The main idea behind this is to trigger the changes in the inventory to avoid any future problems in product supply management.
Forecast Vs. Actual Sales
Just about every company tracks their forecast to actual sales. But when it encompasses the supply planning system and demand and is aided by state-of-the-art demand forecasting software, forecast vs. actual sales can capacitate managers and demand planners to move ahead and make appropriate decisions when the error occurs.
Pareto Analysis
Using the Pareto analysis, companies can determine that customer behavior affects roughly 80% of overall sales. That's why the Pareto analysis of customer demand focuses on multiple KPIs mentioned above to analyze how a company's customers are reacting toward its product.
Pre-Booking for New Product
Suppose an upcoming product is entering the market for pre-booking. With the help of demand planning, management can observe customers' behavior toward the new product. This way, any business can plan its further production speed.
Phase Out Products
This process is precisely opposite to the new product launch. Every product, after its maturity phase, comes to an end eventually. Controlling the product ending pace can directly reflect the company's financial performance. Demand management software enables you to monitor such products closely and make quick decisions to determine when the end of a product’s life span is.
Marketing Intelligence of Competitor Performance
Demand planners need to have a keen observation of their competitors as well. There are a few touch points that they need to keep in mind while doing so:
Rival's new product launch performance
Pinpointing their stock-out products
Their products’ recall rates and product quality issues based on customer reviews
Order Fill Rate
Order filling is an inventory planning KPI. Filling your customers' orders on time or early can increase their recurring rate. It also helps you with favorable word-of-mouth.
Perfect Order Rate
Perfect order rate, aka POR, is a very effective KPI. It shows you how many products have reached your customers with no shortcomings. Every business aims for the perfect POR. It reflects directly into your manufacturing and logistical aspects. Also, a high POR shows how satisfied your customers are with your product.
Demand forecasting software KPIs gather company data across every stage, including sales, inventory, logistics and production, and marketing. So, pulling all the detailed data is essential to calculate accurate demand planning. Every business should observe this data to arrange or rearrange their raw materials, shipping, and inventory planning. It's also crucial to have an automated data input system so that you can study the data in real time.
Avercast Demand Planning Software is the right fit for all your demand planning process. It takes advantage of over 250+ forecasting algorithms, enabling you to calculate your demand planning and demand forecasting with a 99% accuracy rate. Avercast can combine demand planning KPI data and automate comprehensive analysis to help demand planners calculate the actual production and inventory processing faster than any human can with a spreadsheet.