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Demand Planning, What is it and What are its Benefits?

For many organizations the term “demand forecast” is not new, year after year companies have limited this concept to a simple statistical process that spontaneously is tied to the commercial performance of the company; However, despite the underutilization of the data and the information obtained, there are still many doubts about its correct use, especially now that the concept has evolved seeking to integrate with more areas of the company, so not only is it talked about today day of forecasts but of “demand planning”.

But what is demand planning? What are the benefits obtained when creating a demand plan? And what are the best methods to make a demand plan ?, These are some of the basic issues that we will solve today.

Demand planning manages flows of materials and information based on the internal and external processes of the business, in order to respond profitably to market demand. That is, customers must be satisfied but not at any cost. This is perhaps one of the points that is most often overlooked because the word “demand” is associated with “sales”, confusing the commercial functions of the organization with the strategic commitment of the business.

On the other hand, what are the benefits obtained when creating a demand plan? The first thing that needs to be clarified is that when the demand plan is created if only the logistics area is linked and a synergy is not created between the other parts of the company, the plan loses its purpose and reduces overall benefits

Taking into account the above, when the demand plan is created in the company, sales are increased without sacrificing the cost, there is an increase in the level of customer service, the shortages are reduced and in general a reduction of The costs of inventories, transportation and even can come to create better pricing strategies.

What are the best methods to make a demand plan?

There is no better method. This label depends on the quantity and quality of data (horizons, frequencies, historical periods, seasonality, variance, standard deviation), among others, of the purpose and perspective of the glider.