What is NetSuite Demand Planning and Why is it Important?
Are your production planners and buyers spending huge amounts of time and manual effort to forecast demand? Only to find out your forecasts are still inaccurate. NetSuite demand planning helps you get the right inventory to the right place at the right time. Here’s how it all works.
What is demand planning?
Demand planning is a cross-functional process that helps you meet demand for products while minimizing excess inventory. It pulls in data from sales, customer trends, historical sales and seasonal data to help you plan your buying or manufacturing cycles more effectively. As you know, that’s a lot of data to manage from several different places. It’s easy for this process to become overwhelming – especially if you’re doing it manually. The right technology not only simplifies the work but makes it possible for demand planning to be a continuous process in your business.
Why is demand planning important?
Without proper demand planning, you’re more likely to carry excess inventory, tying up working capital, adding inventory carrying costs and increasing the chance that you’ll be stuck with obsolete inventory. It can also make you vulnerable to supply chain disruptions, resulting in backorders and costly rush shipments for raw materials.
Demand planning is the key to optimizing your inventory levels, increasing turns and reducing costs. It gives you full visibility into the day-to-day operational activities that impact buying, so you can have the right product at the right time for your customers.
Demand planning with NetSuite
NetSuite’s demand planning module is designed to handle the heavy lifting of your demand planning process. Here’s a quick demo to give you an idea of how efficient the process is. How does this compare to your current process?
Like most modern demand planning solutions, NetSuite uses the pull method. The process starts with gauging customer demand and using that information to guide buying and manufacturing. The primary challenge is coming up with an accurate demand forecast. NetSuite helps you achieve accurate forecasts by automating certain aspects of the process, with support for four common statistical models.
Moving average – Predicts future demand based on a rolling average of the last few sales periods.
Linear regression – Sometimes called “line of best fit”, this model takes previous demand levels and puts them through a least-square regression model to predict future sales.
Seasonal trends – Uses historical sales during particular months or seasons to predict future demand for the same period. This method is most appropriate for companies with seasonal fluctuations.
Sales forecast – Estimates demand based on forward-looking sales forecast data (like quotes, opportunities, etc.).
Here are a few other features that make NetSuite demand planning even more valuable:
The system can generate planning messages to assist the user in making the right decisions and optimize inventory levels where appropriate.
You can easily generate supply plans based on your demand plan with a simple click, saving you time and ensuring ordering accuracy.
Users can be notified of order tasks based on planning via system reminders, email alerts, saved searches and schedule reports, to minimize delays.
Ready to make the leap to NetSuite?
Demand planning is a valuable tool in the toolkit for any distributor or manufacturer. But that’s just one of the many things NetSuite can do. As a fully cloud ERP solution, NetSuite helps you streamline business operations and eliminate the IT overhead, so you can focus on what matters – delivering to your customers and boosting profit. As your Canadian NetSuite implementation partner, we’re here to guide you through the process – right from evaluation, through implementation and beyond. Let’s connect to get started.