Demand planning entails using a multiple step supply chain management process to generate forecasts. Successful demand planning can help organizations increase the precision of revenue forecasts, align inventory levels with demand and improve organizational profits. Demand planning uses forecasts and experiences to calculate different items at different points in the supply chain.
Demand planning utilizes statistical analysis, best practices, as well as prior and present demand cycles to assess future customer demand. It also aides as an input to capacity planning to provision required IT resources based on present and anticipated future demand.
Successful demand planning is extremely accurate and increases profitability. It is beneficial to see where your company is headed and to take actions to meet financial and operational demand. Enterprises frequently use demand planning to communicate to financial institutions and other stake holders. Sales use demand planning to create benchmarks and allocate resources. Operations use it to purchase and ship items, schedule production and establish inventory procedures.