Supply and Demand Planning in Supply Chain is Imperative for Organization’s Overall Health

1. Supply and Demand Planning in Supply Chain is Imperative for Organization’s Overall Health Manufacturers are under constant pressure to reduce costs, enhance supply chain efficiency, and enhance revenue margins. Accurate supply and demand planning helps to create smooth and responsive supply chain plans to achieve operational excellence. Both demand and supply planning is crucial for the organization for its overall health and profitability. Organizations need to have smooth and efficient supply chains in order to maximize their profitability. Accurate demand planning is essential for businesses to make sure that supply chains are efficient for inventory and revenue. However, both demand and supply planning is equally important to ensure efficient delivery of service. Supply planning achieves the demand plan while fulfilling the financial and service goals of the business. Supply planning includes all aspects related to inventory production and logistics like open and planned customer orders, on- hand quantities, lead times, minimum order quantity, safety stock, demand chase, and product leveling. When supply and demand planning is unified and well-aligned, then the supply chain runs smoothly leading to a positive effect on all business operations.

2. Supply planning helps in managing inventory to meet targets of the forecasted customer demand whereas demand planning helps in forecasting customer demand. Supply planning depends upon the demand projections created by a demand planning software and it usually takes the lead from the demand planning determinations. Though both demand and supply planning are two distinct processes but organizations need to have good control over both to be successful. Both demand and supply planning go hand-by-hand in organizations, as without accurate demand planning, supply planners will not be able to plan for optimal production and inventory, and without a robust supply plan organizations may face production delays, and inventory surpluses, and tension among stakeholders.

3. Demand planning equips supply chain organizations with the tools to project future demand accurately. It predicts demand patterns based on historical sales data, current sales, orders, shipments, and market data so that organizations can make astute business decisions related to inventory and production. The demand planning informs supply planners about the future requirements for products and services so that supply planners can find ways to meet those requirements. Supply planning is carried out based on the forecast made from the demand planning process and includes manufacturing, distribution, and procurement. Supple planning fulfills the demand plan while meeting the organization benchmarks, in short, it meets the demand forecasts efficiently. Supply and demand planning is essential to balance supply with the demand that will help organizations meet the needs of the market. The goods that are produced by the organizations or the services that are rendered by the organizations must be available when they are required. Supply and demand planning helps businesses make informed decisions that ensure products or services' availability and also keep excess inventory to a minimum. It has been revealed in research that 79% of organizations with high-performing supply chains achieve greater revenue growth and they also benefit from lower supply chain costs, have fewer inventory holdings, and have faster cash-to-cash cycles.