Demand planning allows businesses to predict future demand and align their operations – whether it’s manufacturing, sourcing, or distribution – accordingly. By balancing supply and demand, demand planning ensures that companies don’t overstock or understock, keeping both inventory costs and customer satisfaction in check.
The most effective demand planning takes things beyond forecasting, it makes use of modern tools and strategies to accurately project demand, manage stock levels and maintain operational efficiency. And while the balance between excess and shortage is at the core, it also involves influencing demand through promotions, seasonal adjustments and market trends.
And this is all possible with NetSuite’s demand planning tools, which offer sophisticated forecasting methods and real-time data to drive smarter decisions, optimise inventory and improve the flow from production to delivery.
Key features of the NetSuite Demand Planning Module
Demand forecasting
Uses historical data, sales trends, and market conditions to forecast future demand for products or services. It enables businesses to anticipate shifts in demand and plan their supply chain accordingly.
Inventory optimisation
Helps businesses optimise stock levels, reducing the risk of overstocking or stockouts. This ensures that companies carry the right amount of inventory based on forecasted demand, improving cash flow and reducing storage costs.
Automated replenishment
Automatically generates purchase orders when inventory reaches a predefined threshold, based on forecasted demand. This helps businesses maintain optimal stock levels without the need for manual intervention.
The NetSuite forecasting methods
NetSuite’s Demand Planning Module provides a variety of forecasting methods to suit different business needs, including:
- Moving Average calculates the average of historical sales data over a defined period to predict future demand. It’s ideal for businesses with stable demand patterns.
- Seasonal Forecast accounts for seasonal trends in demand, such as increased sales during holidays or specific seasons (e.g., winter clothing, summer toys). This helps businesses plan inventory accordingly.
- Exponential Smoothing assigns greater weight to more recent sales data while progressively decreasing the weight of older data. It’s useful when demand patterns are subject to sudden changes or when businesses need to quickly adjust to market shifts.
How do all these capabilities and forecasting methods come together to drive smarter decision-making? Let’s explore some real-world business use cases.
Real-world business use cases
Predicting demand with seasonal and product launch variability for an electronics manufacturer
Take an electronics manufacturer whose demand is driven by both product launches and seasonal trends. For this company, predicting demand accurately is critical. Overstocking components results in high storage costs, while understocking can lead to production delays and missed sales.
By leveraging NetSuite’s predictive analytics, the manufacturer can analyse historical sales data, monitor emerging market trends, and account for seasonal demand fluctuations to forecast future component needs with precision. This allows the company to proactively adjust production schedules and raw material procurement ahead of time, ensuring materials arrive just when they’re needed – without overcommitting to excess stock.
Managing seasonal variations and consumer trends in fashion retail
Consider a global fashion retailer facing fluctuating demand driven by both seasonal trends and rapidly changing consumer preferences. Accurately predicting demand will avoid overstocking unpopular items or running out of stock on bestsellers.
Using NetSuite’s predictive analytics, the retailer can analyse historical sales data, account for seasonality, and monitor real-time consumer trends to forecast demand for specific collections or styles. By incorporating external factors such as fashion events, holidays, and promotional periods, they can fine-tune inventory orders and production schedules.
Managing perishable goods and fluctuating demand in food distribution
For a food distributor dealing with perishable products, managing inventory is a delicate balance between meeting consumer demand and preventing wastage. With short shelf lives, overstocking can lead to spoilage, while understocking can result in stockouts and lost sales.
NetSuite’s demand forecasting tools allow the distributor to track past sales data, account for seasonal demand, and even integrate weather data or local events that could influence demand. They can use this information to forecast future demand with higher accuracy, ensuring that perishable items are ordered in the right quantities and replenished just in time.
Aligning raw material procurement with production schedules in industrial manufacturing
An industrial manufacturer produces heavy machinery and relies on specific raw materials, which often have long lead times. Predicting the demand for materials – based on project timelines and economic shifts – is critical to avoid delays and maximise production efficiency.
With NetSuite’s predictive analytics, the manufacturer can leverage historical data, upcoming project forecasts and market conditions to forecast material requirements. This enables the company to plan raw material procurement well in advance, ensuring that production schedules are aligned with actual demand, while avoiding the cost of storing excess materials.
Optimising multi-channel and multi-region demand in wholesale distribution
A wholesale distributor serving multiple regions and sales channels faces the challenge of balancing inventory across eCommerce, retail and direct sales. Demand for products fluctuates across regions, especially during peak sales periods, requiring precise demand forecasting and inventory allocation.
NetSuite’s demand forecasting tools allow the distributor to forecast demand by region, product type, and sales channel. By integrating sales history with real-time data from all channels, they can predict where demand will spike and adjust inventory levels across warehouses accordingly.
By automating replenishment based on these forecasts, the distributor can ensure that stock is always available where it’s needed most, improving delivery times and reducing the risk of stockouts.
Managing supply chain disruptions in the global market
A global supplier of components to the automotive industry faces unpredictable disruptions due to factors like economic changes, geopolitical tensions, or natural disasters. Predicting demand for parts amid these uncertainties requires flexibility and foresight.
Using NetSuite’s predictive analytics, the supplier can incorporate external data such as economic indicators, market forecasts, and news events to forecast future demand and adjust their supply chain strategy. This allows the business to anticipate shifts in demand before they occur, whether it’s a sudden drop in consumer purchasing power or a spike in demand for specific parts due to changing regulations.
Fine-tuning inventory levels during promotional periods in retail
A toy retailer runs frequent promotions, which can create sharp spikes in demand. Predicting how much inventory to allocate for each promotional period is critical to avoid both overstocking and stockouts.
With NetSuite’s demand forecasting capabilities, the retailer can use historical sales data, combined with marketing plans and promotional calendars, to predict demand during key events like Black Friday or back-to-school sales. By forecasting these periods in advance, the retailer can optimise inventory levels, ensuring that they have sufficient stock for high-demand products without overcommitting.
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Learn more:
- A deep dive into how NetSuite transforms supply chains for ANZ businesses >
- How NetSuite streamlines supply chain operations – end to end >
- How NetSuite transforms inventory into a competitive advantage >
- Make procurement a source of competitive strength with NetSuite >
- A closer look at NetSuite Supply Chain Control Tower >