How Smarter Demand Planning Boosts Your Bottom Line

Demand planning is crucial for any business aiming to stay competitive in today’s dynamic market environment. Accurate demand planning ensures a company can meet customer needs without overstocking or understocking products, which directly impacts customer satisfaction and overall profitability. It’s the backbone of a resilient supply chain that can quickly adapt to market fluctuations, seasonal trends, and unexpected disruptions.

However, many companies face significant challenges with their demand planning processes. Traditional methods often rely on manual processes, historical data, and simplistic forecasting models, which may not account for the complexity and variability of modern markets. This can lead to inaccurate forecasts, resulting in either surplus inventory or stockouts. And, siloed data and a lack of integration across departments hinder the visibility and collaboration needed for precise demand planning.

To overcome these challenges, businesses need to modernize their demand planning processes by leveraging digital transformation and advanced technologies such as AI, machine learning, and data analytics. These tools can provide more accurate predictions, real-time insights, and enhanced decision-making capabilities, enabling companies to stay agile, responsive, and profitable.

The Strategic Significance of Demand Planning

Demand planning involves predicting future customer demand. It aligns all subsequent planning activities such as purchasing schedules, production timelines, inventory management, and supply chain activities.

Effective demand planning helps businesses optimize their resources, reduce operational costs, and improve service levels and its accuracy directly influences operational efficiency and financial health.

The Current State of Demand Planning

Despite its critical role, a significant portion of companies rely on outdated technology and tools for demand planning. Studies show that up to 50 percent of businesses use Microsoft Excel for this purpose. While Excel is familiar and flexible, it often falls short in handling large-scale demand planning needs.

For example, demand is dynamic, not static. Customer preferences, market trends, and external factors can change rapidly. Excel struggles to keep pace with this complexity, which could create inefficiencies and inaccuracies.

Financial Impacts of Inaccurate Demand Planning

And when it comes to demand planning, accuracy is everything! Inaccurate forecasts can lead to a domino effect of problems including:

• Inventory nightmares — Overstocking results in tied-up capital, increased storage costs, and potential product obsolescence. Whereas stockouts lead to lost sales, customer attrition or frustration, and a damaged brand reputation.
• Margin erosion — Inaccurate forecasts can necessitate costly overproduction and  expedited production runs or incremental cost and risk of carrying extra inventory.
• Revenue loss — Failing to meet customer demand can result in lost sales and a damaged reputation.
• Resource allocation & impact on strategic decisions — It provides critical data that supports production scheduling, workforce planning, and financial forecasting.

Microsoft Dynamics 365 Demand Planning Solution

To address these challenges, Microsoft offers a next-generation, standalone Dynamics 365 demand planning solution. Designed for seamless integration with any external ERP system, this solution provides flexibility and a user-friendly interface that enhances demand planning accuracy and operational efficiency.

This app is powered by best-in-class forecasting algorithms and models, and offers immersive user experiences, intelligent reports, and analytics. It empowers organizations to build an agile, resilient, and sustainable demand planning practice that’s fueled by intelligence and collaboration. Top capabilities include:

• Advanced forecasting — Utilize advanced algorithms to predict demand accurately, considering historical data, seasonality, trends, and external factors
• Collaborative planning — Facilitate collaboration among teams by sharing insights, collaborating on forecasts, and adjusting plans in real-time
• Inventory optimization — Align inventory levels with predicted demand, reducing excess inventory costs while ensuring product availability
• Integration — Seamlessly integrate with other external systems, enabling holistic planning across the supply chain
• Machine learning — Continuously improve forecasting accuracy by learning from past performance and adjusting predictions accordingly.
• Visualization and reporting — Intuitive dashboards and reporting tools visualize demand data, trends, and performance metrics for data-driven decisions
• Adaptive planning — Adapt to changing market conditions and demand patterns, ensuring agility and responsiveness in planning processes
• Demand sensing — Utilize real-time data streams to promptly sense demand shifts, allowing dynamic adjustment of plans
• Cross-functional alignment — Align demand planning with other business functions such as sales, marketing, and finance to foster collaboration and goal alignment

Demand Planning in the AI Era

AI and machine learning are poised to impact supply chain planning in a huge way. According to McKinsey Digital, that number is estimated to be between $1.2T and $2T! And a Gartner study recently found 43 percent of companies are planning to use AI-powered demand forecasting within two years.

Microsoft’s Dynamics 365 demand planning app is AI powered, leveraging the Microsoft Copilot assistant to enhance user experience and productivity. Copilot provides intelligent suggestions, automates repetitive tasks, and offers contextual guidance throughout the demand planning process. Other Copilot features include:

• Forecasting Assistance — Copilot uses machine learning algorithms to analyze historical data, identify patterns, and suggest optimal forecasting models to improve forecast accuracy.
• Scenario Analysis Support — Copilot automatically generates alternative scenarios based on user-defined parameters and historical data, helping users evaluate the impact on demand forecasts, inventory levels, and financial performance for more informed decision-making and risk management.

A Compelling Value Proposition

Adopting the Dynamics 365 demand planning solution is a straightforward project and, as you can see, offers substantial benefits. It streamlines demand planning processes, enhances operational efficiency, and supports better business outcomes with its advanced features and seamless integration capabilities.

This solution can be implemented swiftly and with minimal disruption, freeing users from the constraints and data silos of Excel and delivering significant business value in a short timeframe. It allows demand planning to be the conductor of your operational orchestra, synchronizing purchasing, production, and inventory management for a flawless performance.

Unlock the Power of Smarter Demand Planning

Effective demand planning is vital for optimizing inventory, reducing costs, and improving customer satisfaction. If you still rely on Excel and are looking for an advanced automated, robust, and efficient alternative to enhance accuracy and drive improved financial performance, you need Microsoft’s Dynamics 365 demand planning app.

And Hitachi Solutions is here to help. We are a certified Microsoft Gold Partner who has been supporting our customers’ data and business system modernization initiatives for two decades. We offer advisory services, industry and technology expertise, and implementation excellence. Our goal is to help you find a demand planning solution that is tailored for your unique needs and provides the most impactful outcomes for your business.

Contact us today to:

• Discuss your specific scenario and see how we can help you transform demand planning into a strategic advantage!
• Request a demo of the Dynamics 365 demand planning app to see if it fits your business needs.