Your first question is probably: Why digitize Demand & Inventory planning? Any Benefits og Cost savings? Below we elaborate on the questions and provide some answers.
Demand & Inventory planning is an essential part of business planning and involves marketing, sales, finance, production, logistics etc. A good demand forecast is the foundation for an efficient supply chain that ultimately improves service levels, cash flow, profitability and competitiveness.
Producing an applicable and trustworthy forecast requires processes, skills and tools.
To activate the inventory savings from better forecasts requires new concepts, communication and tools.
Traditional Demand & Inventory Planning
Many companies are not able to improve a forecast saying what we sold yesterday is our forecast for tomorrow. But why are companies not able beat such a simple approach? And why are companies not able to reveal inventory and production savings?
The answers are probably:
- Processes are not transparent and built for improvement
- People with business knowledge are not supported by data insight
- People with demand planning knowledge do not have knowledge to operate statistics and tools
- Tools are not intiutive and too complex to operate
- Demand signal linked to inventory and production by classic MRP and safety stock
- Tools do not provide newest technology with focus on how to improve the forecast, inventory and process
Demand planning is a work-intensive process. The data is typically infested with errors and needs to be cleansed and segmented. The correct statistical algorithms chosen, integrated and executed. These statistical forecasts are manually enriched and adjusted by company stake-holders based on in-house knowledge of in-coming sizable orders, extraordinary drop in demand or other external factors not displayed in the historical data. The forecast has to be integrated with supply first in a mid-term S&OP process and second in a near term S&OE process, but silos, culture and tools counteracts the integration.
Human interaction with the demand processes can be confusing and produce days and even weeks of comprehensive work-loads that still do not provide an applicable forecast and inventory due to the high amount of complexity in the data, process and tools.
Digitize Demand & Inventory Planning
The recipe for a good demand & inventory plan is to realize the strengths and weakness in the current process. A old saying tells us to do what we are best at. Is it your core competences to do statistical forecast, make deep dive on data, make demand planning frameworks, align forecast with inventory strategies and adapt technology invention to your planning processes? Probably not. Your core business is probably to make sure goods are available when customers request them. Now is the time to consider digitize the demand & inventory planning and focus on your core processes of your business planning, operations and continuous development.
The potential pros of digitizing the demand & inventory planning:
- Simplify demand planning and more focus on market insight
- Transparent process with focus on improvements
- Creates stability and trust in your general forecasting & supply process and business planning
- Eliminates the need for hardcore in-house statistical skills & supply planning experts
- Digital On-demand statistical forecasting & inventory optimization saves time and potentially FTE
- Higher final forecast accuracy allows for fact-based strategical decision making
- Utilize new concepts of integrating demand signal, inventory, production and supply
The potential cons of digitizing:
- Risk of data: Non-encrypted data outside company
- Change management: People have to adopt to new processes and Technology
- Only focus on Technology: People and process area are more important than technology
At sophub we are mitigating the cons of digitizing by data encryption, provide consultant to ensure a proper process shaped for improvements and match process and people training to the current maturity level.
How sophub helps digitize Planning
At sophub we acknowledge the fact that a simple solution creates more impact than a complex solution. To quote Einstein: Solutions should be made as simple as possible, but not simpler.
In demand & inventory planning a simple solution means:
- Get a trustworth baseline forecast out-of-box
- Get a list of factors impacting your sales like promotion, weather and holidays
- Told where manual input makes impact
- Tools “talking” business language and intuitive to use
- Guides for how to improve forecast & inventory
- Get inventory size to meet service levels at lowest cost
- Aligned concepts, process, tools, and people skills to planning and execution
The simple solution is build on decades of experience of linking concepts, process, people and tools to planning and execution from demand to supply for different industries. Since sophub is your wing manager all the way we walk the talk based on effective methods, communication and our suite of tools.
On the tool side sophub both support your existing infrastructure by proving plugins to the leading demand planning and ERP tools and also provide our own solution inside Microsoft Excel. Beside the statistical forecast we provide promotion analysis, a prioritized task list, dashboard reports, rootcause tool, improvement tool, and monhtly newsletter with deep insight analysis of each company buying our service and a monthly meeting to ensure progress and improvements.
Do sophub sounds expensive? sophub is a low digital investment paying off already from day 1. The cost is typically less than 3% of your current planning costs, while your KPIs are improved dramatically.
Do sophub take long time to implement? No, 2 hours
How long does it take to realize the improvements? We see improvement already from the first cycle. The full potential is typically realized within a year. Typically the biggest challenge is to change behaviour of the organization.