In today’s enterprise market, Demand Planning is pivotal. Not only it allows a business to set correct inventory levels, price their products correctly, but also helps understand how to expand or contract their future operations.

What is Demand Planning?

Demand planning is the process of forecasting the demand for a product or service so it can be produced and delivered more efficiently and to the satisfaction of customers. 

Effective planning of demand can increase profitability, customer satisfaction and align inventory levels with peaks. 

This helps in achieving and maintaining an effectively lean supply equilibrium, one in which store inventories contain just as many products as demand dictates, but no more. That’s not an easy goal, especially since it requires coordination across the entire organization. But the business implications are significant. Excess inventory locks up working capital, adds inventory carrying costs and increases the potential that you’ll be stuck with low value or obsolete inventory. 

Who should look at Demand Planning?

Usually it is a responsibility of the Supply Chain Manager. The goal of a demand planner is to drive the demand and inventory levels. In other words, to maximize cash flows, and sales and services levels. 

Lacking a defined process for a demand planning cycle leads to chaos. Confusing process with information that is simply a set of widely known facts around an organization is all too common, making it difficult to hold anyone accountable, and thus hurting overall performance. Poor forecasting can also lead to lost sales, depleted inventory, unhappy customers, and millions in lost revenue. 

What are the challenges to Demand Planning?

Challenges faced when planning demand are: 

  • Forecasting Demand Too Low 
  • Forecasting Demand Too High 
  • Forecasting Demand Too Early 

Demand planning is a cumbersome process involving data and variety of templates to align on either long term or short – term plan.  

Major challenges faced in the Demand Prediction process are: 

  1. Data Issues
    • Data collection – The data will be in different sources and collection of all that data will be a difficult task. 
    • Combining data – Combining the data coming from different sources is a common challenge   
  2. Comparison
    • Base for Planning – Planners need to assume a start point, which could be historical data and other influencing factors. Also generating a forecast helps planners.
    • Comparing the data got from different sources might lead to incorrect analysis.

How did we solve these challenges?

With our solution (Intelligent Demand Planning by VASPP), we have created industry standard content using SAP Analytics Cloud Planning and Predictive capabilities. 

We follow the best practice approach of Demand Planning. The VASPP solution focuses on the three key aspects: 

Data Collection

Data resides in diverse sources like SAP ERP, SAP S/4, SAP C4C and IoT Sources, unstructured data such as csv, excel, txt etc. 

Accurate Forecast

SAP Analytics Cloud offers predictive features which allows users to do time series forecasting, classification & regression scenarios to augment stories which provided the predictions with minimal error. These models can be created on SAC with ease and with very low maintenance effort.

Decision Making

SAC has both forecasting and planning capabilities in a single platform using which demand forecasting and planning can be handled with great ease. Supply chain, finance and procurement teams can run comparisons and take informed decisions best suited plan to achieve their performance and profit goals making it easier to recognize emerging opportunities and make strategic decisions. 

Our solution is packaged into SAP Analytics Cloud Content and can easily be deployed in a customer’s tenant. This content is available with underlying planning models, data actions, calculations, predictive modelling, dashboards (Stories) and Planning templates. The model also has a provision to incorporate AI driven forecast data in integration with SAP Data Intelligence. 

If the business need would be to customize and use this solution, we have provided an option to customize the content to fit the planning process and deploy. 

Solution Overview

The planning templates on SAP Analytics Cloud here allows users to use all planning functions like allocations, aggregations, revaluation, spreading etc. In our solution, we provide few industry standard planning templates which can also be customized as per need. 

The solution can be extended to SAP Data Warehouse Cloud as a data warehouse where all the predictions and historical data from different sources is collected for analysis. 

SAP DI plays the pivotal role, where it extracts the data from sources into DWC followed by data processing. 

Planning model is created on SAC with a few steps. Using this, planning versions are created leading to inputs for building a Dtory/Dashboard. With the help of the SAC features such as data actions, forecast scenario etc. Supply chain, finance and procurement teams can run comparisons and can make informed decisions driving towards their enterprise’s profit and performance goals. 

Conclusion

Our solution scenario will help to do the Demand Planning exercise for organizations which includes analyze data and build forecasts for new products, manage discontinuance planning, based on performance and profit, and adjust forecasts based on KPIs. Avoid surprises and quickly adjust for promotions, disruptions like natural disasters and labor issues, and other demand variations.