What is Demand Planning: Definition and Best Practices

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Defining Demand Planning

Demand planning is a strategic process used by companies to forecast customer demand and plan their supply chain activities accordingly. This involves predicting future customer demand based on historical data, market trends, and other influencing factors. The aim is to ensure that the right products are available at the right time, in the right quantities, without overstocking or stockouts, thus optimizing costs and meeting customer expectations. Demand planning often includes aspects like sales forecasting, inventory management, and production planning.

The importance of accurate demand planning

Accurate demand planning is crucial for several reasons:

  • Inventory Management: It helps in maintaining optimal inventory levels. Accurate demand forecasts prevent overstocking, which ties up capital, and understocking, which can lead to lost sales and customer dissatisfaction.
  • Cost Reduction: By predicting demand accurately, a business can reduce costs associated with excess inventory storage, waste of perishable goods, and rush orders for restocking.
  • Improved Production Scheduling: It enables efficient production planning, ensuring effective resource allocation and utilization, reducing lead times and minimizing idle time in production.
  • Supply Chain Management and Efficiency: Accurate demand planning optimizes the entire supply chain, improving supplier relationships and allowing for better negotiation and collaboration.
  • Customer Satisfaction: It ensures that customer demands are met consistently, enhancing customer service and loyalty.
  • Financial Planning: It aids in more accurate financial forecasting and budgeting, impacting overall business profitability and strategic planning.
  • Market Responsiveness: Businesses can respond more effectively to market trends and changing market demands, adapting their strategies to meet evolving customer needs.
  • Risk Mitigation: It helps in anticipating shifts in demand, allowing businesses to prepare for and mitigate risks associated with market volatility.

Navigating Organizational Dynamics: Keen’s Blueprint for Unified Success

Trade spend operates in a complex ecosystem where marketing, trade, and retail media teams often function in silos, hindering the potential for unified success. This guide delves into the challenges faced by businesses in demand planning and trade operations, illuminating how Keen is poised to revolutionize the landscape by offering a unique opportunity to provide a unified perspective. Using Keen’s platform is a demand planning best practice, and has the potential to drive better accuracy, consistency, efficiency, and accountability, emerging as the source of truth for marketing, revenue management, and finance.

The Siloed Landscape:

In many companies, marketing and revenue management are separate entities, with marketing teams owning channels and sometimes the P&L, while trade budgets and retail media reside within the revenue management group. The lack of integration between these critical functions poses a challenge for achieving a cohesive business strategy.

The S&OP Process:

The Sales & Operations Planning (S&OP) process, conducted monthly, involves teams explaining the previous month’s performance and providing forecasts. Marketing and revenue management teams bring their perspectives to the table, leading to a consensus macro forecast. However, this process often lacks real-time collaboration and may not fully leverage the synergies between marketing, trade, and retail media.

Translating Macro to Micro:

The macro forecast generated through the S&OP process must be translated into a granular SKU-level forecast by a demand planning team. Forecast accuracy, or achieving the right mix is crucial, as it feeds into the supply chain, guiding production at plants while accounting for inventory levels.

The Keen Difference:

Keen steps into this landscape with a groundbreaking opportunity. By providing a unified perspective across marketing, trade, and retail media, Keen’s platform drives unparalleled accuracy, consistency, and efficiency. This real-time consensus forecast can seamlessly feed into demand planning and supply chain forecasts, streamlining the entire process.

The Source of Truth:

Keen can be the source of truth for marketing, revenue management, and finance. By offering a platform that fosters collaboration and delivers real-time data and insights, Keen enables continuous refinement and improvement while ensuring that businesses are equipped with accurate and actionable information to drive success.

Keen’s platform presents a transformative opportunity to overcome the challenges inherent in trade. By unifying perspectives across marketing, trade, and retail media, the Keen Platform not only addresses existing inefficiencies but also acts as the catalyst for continuously improving results over time. Further, Keen empowers you to update models and actualize results every month, becoming the source of truth in your organization. 

Get Keen and navigate your marketing and  trade investments with a unified, efficient, and accurate approach.

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