5 Steps For Measuring Demand In Business Operations

Demand forecasting is basic to any business plan or budget and even to some investment analysis for your business operation. Without measuring or forecasting we will never achieve our targets that set during Supply Chain Planning, Sales and Operations Planning, even without an accurate demand forecast of your product or service it is not possible to plan adequately for future events, moreover, to react them properly. It is therefore important for a company to have the ability to satisfy its customers and effectively manage its resources simultaneously. With this concept of a forecast as a request for any product or service it becomes critical to the proper utilization of resources, capacity planning and control of your demand planning.

Demand, as a rule, should be measured during a "typical" week in each month, for at least 4 months. There are few simple steps to do in order to measure what is and is not successful in your demand forecasting efforts

1. Examine your past sales records

The first simple step to predict your current demand is to go over your past records, which is the most frequently used indicator of current demand. You can take, for example, the last three business quarters to analyze and proportionate it with your future plans.

2. Track trends over time

This step is very popular because it is inexpensive. Following trends is a key for determining success. When you track metrics over time to understand your prospect-to-lead, lead-to-opportunity and opportunity-to-win stages, you can determine not only the quality of leads you attract, but also how well marketing is doing in terms of lead generation.

3. Seasonality of demand

As a smart business owner you need to forecast the costs of producing and selling your products for each period over the forecasting horizon. Consumer interest in purchasing particular products is only during a specific period within the calendar year. Using this knowledge, you can estimate what the market demand for your business will be. The market demand of your business is equal to your potential market share multiplied by the total market demand.

4. Forecasting current demand

This is one of the essential steps not only measure an item's seasonality and past sales but also current demand. In business the current demand is considered as the extent of market willingness to pay the ruling prices of good s and services. Forecasting current demand salespeople should measure the expected level of company sales based on a current marketing plans and an assumed marketing environment.

5. Forecasting future market demand

Demand forecasting for the future sales operations is the last step and we have two components here to measure: forecasting total demand and forecasting area demand. First forecasting total demand, we can measure area forecast using the same principles as with the current demand. A demand analysis would entail determining current demand and using assumptions for demand build up to predict future demand over the time period of the financial model.

To sum up all business owners would like to know the current as well as the future demand of their sales operations using the data of past sales records, following the trends and analyzing the seasonality of demand.

Design Considerations for Typical Supply Chain planning

Design Considerations for an effective supply chain system

Typical Supply Chain planning :

A typical supply chain consists of staging, packing and shipping to the customers. These functions in many evolved organizations are handled through supply chain systems through work flow driven processes. There is a tendency to continue with the operations as long as the orders are getting fulfilled within the contractual time frame. However, as the organizations grow the existing systems and processes which have been defined in the early stages may face the issues of scaling up to the new fulfillment obligations. This is partly because analytics capability is not inherent in some systems as they were not designed to be so in the first place.

For any supply chain to be effective instead of just being a fulfillment engine it must also include the features of forecasting i.e. supply and demand analysis, and optimizing shipping features among others. The challenge is to include these functions during the design for a startup organization/s as many inputs like inventory/stocking capabilities, future demand and geographies will at most be sketchy although these might well be included in the overall business plan and roll out schedules.

Inputs for Design:

Factoring the existing stocking capabilities i.e. warehouse disposition and future planned product lines.

Evaluate the pros and cons of centralized shipping vs localizing it in the operational territories i.e. corporate function vs organizational.

Have a system of checks so that any drop in inventory levels will trigger an alert to the shipping system so that available to promise dates and order quantities can be adjusted accordingly.

Evaluation of FOB terms and conditions and planning for preferred shipping carriers in relation to the most frequently used FOB can be undertaken.

Provision for simulating the supply chain system for different scenarios like holiday season and lean season i.e. stress testing should be built in the system so that optimum inventory levels can be arrived at for different periods.

Ability to generate inventory physical count and valuation on a periodical basis or on-demand so that overheads with respect to maintaining the inventory can be minimized.

Real time integration of Proof of Delivery with the fulfillment engine so that the customer operations can have up to date information.

Ability to recognize revenue at various levels depending on the contractual and payment terms. Ex: Order confirmation, completion of shipping or on receipt of delivery.

Ability to incorporate the various tax regimes structures and be able to calculate the tax components on the items shipped intrinsically. Ex: Sales, VAT etc.

Few more things that one can considered while designing Supply Chain planning. Medium and large scale industries are required supply chain management not only it help in avoiding unwanted situations, but also also very useful for implementing other planning like Demand Planning, Inventory Planning & Sales and Operations Planning (s&op). Business owner  must opt for perfect supply chain solutions.

Demand Planning - Scenarios we should know

Today, we are going to share about the things we need take into account before preparing demand planning. In 80s or early 90s we were not required to plan much about our product demand, analyzing risk factors, changing trend in coming time etc, but now things are totally different. We are living a competitive market where so many things happen around us and being a businessman we are required to analyze the things that help in finalizing the optimum utilization of the resources, alternates, managing labor, availability of resources and many other things. Reason behind the analyzing so much things just to have demand planning that work I real world scenarios. 

Once we know what we can do, how we have to do it, what are responsibilities we are required to share with our staff, number units to manufacture, then things became easy to achieve. Demand forecasting helpful in many ways while implementing supply chain planning or Sales and Operations Planning (s&op). Try to understand our below explained scenario through which tried to explain why we need have perfect action plan in medium or large scale industries.

Let suppose if my market is in Asia and my business is located in North America, I will have to use either ocean or air shipping as part of my supply chain. If however, my primary market is within North America then I will rely on rail, road or air. How I decide which method is right for me will depend on numerous factors, not least of which will be cost and time sensitivity.

If my customer required me to expedite shipment, I might be required to consider shipping via air even though the costs involved will be much higher. These increased costs will be passed to the customer, however if my customer is not in a hurry for the shipment, they may be willing to accept longer wait times for the product in return for reduction in price. In this instance I may choose to ship over the road. This method of transportation is generally cheaper than transporting by air.

Rail shipments may be even cheaper, especially when dealing in bulk goods. Companies in the rail business can take advantage of economies of scale. Rail cars travel on predetermined tracks, decreasing friction and increasing environmental efficiency. As a result, one locomotive can haul a large amount of rail cars. If your customer is not in a hurry, there may be great cost savings for both parties when shipping by this method. However, this method is inflexible and may not provide service direct to your customer’s door.

Prefer Shipping method that suits

Shipping over the road is the most common shipping system, This method can provide relatively rapid transport of goods to market, and is flexible enough to reach most destinations directly. Some companies maintain their own fleet, but most companies find it more cost effective to hire haulage companies to provide this service for them. It is cheaper than air and, while slightly more expensive than rail; it provides a good compromise when both speed and time are factors in the decision process.

In reality you may have to use a combination of shipping methods to move your product to market. These costs to you must be included in the cost of your product if your company is to remain viable. Returning to our original comments, Demand planning clearly is utmost importance to the success of any business. Understanding this process is not easy, but the entrepreneur must have resources according to the plan.


 

Demand Planning - opt today's generation approach

Collaborative demand planning: planning to next Level

As we discussed in our past blog's, that demand planning play a huge role in growing business. If we had a perfect demand planning then defiantly we are benefited for Cost, Revenue & Services.

One of our product called Demand Xpress which is an innovative product in today's requirement. Our product provides a comprehensive solutions for demand planning for all size of industries from small to medium. Its offers a full range of solutions capabilities that can be deployed in a fraction of both the time & cost of alternative solutions that provide comparable functionality.

ADEXA taking Demand Planning to next level

With the use our Demand Xpress product, one can improve their supply chain while helping in other planning like Sales and Operations Planning (s&op) & Supply Chain Planning. 

Supply chain management, it sounds important but what is it?? That’s a good question and one all successful entrepreneurs must have an answer for. Simply put, it is the process by which a business moves its product to market.

You've got a great idea for a product, and you find the funding to make your idea a reality. You've even created a marketing campaign to introduce your product to the world. So that’s it then, your work is done and you can sit back and watch the profits roll in right? Well not quite. Your product won’t be a success until you can get it to the consumer at a price that makes sense. This where supply chain management become essential to your products success.

Suppliers

It all starts with your supplier. To make the best widget, at the most profitable price, you need an adequate supply of components to be available at a price that fits within you budget. The suppliers provide you with the raw materials which you in turn use to create the world’s greatest widget.

A business could, if it so chose, becomes its own raw materials supplier. In most cases, this would be cost prohibitive. Mining for raw materials is normally a labor intensive, expensive proposition.

For example, in order to make a tablet computer (finished product) you need crude oil to produce plastic granulate, which in turn is used to create the plastic body of the tablet. However, as a maker of tablet computer you have no need for the vast amounts for crude oil which would need to be extracted in order for such a venture to be profitable. Besides, as a maker of tablet computers you have no interest in getting into such an industry. This is why we have suppliers. They can provide you with the raw materials required for your finished product. As long as they can do so  at a price that make senses, everybody wins.

Production Process

This is where you come in. You've found a good group of suppliers to provide you with all the raw materials you need to make your widget at a price that’s reasonable. So now you have the funding in place to develop your product and you have the supply of raw materials needed to make your product a reality.

The next step is to put your production plan in motion. You develop as assembly process and you are producing widgets at a rapid rate. Everything seems fantastic! Now the profits have to start piling up! Not yet. You still have to get your finished product to market. Where your market I relation to your production facilities, will have a lot to do with how you get it there.

Shipping

For a lot of entrepreneurs this is where they get lost. How on earth do I get my product to market? There are many ways of doing this and, as mentioned above, this will depend on where your market is. The methods available include ocean, air, rail and road.

With supply chain management, we can go in right direction to implement Demand Planning, Sales and Operations Planning (s&op), Inventory Planning on time to generate more revenue. Adexa is dedicated to delivering solutions with measurable results at the lowest cost of ownership.

Adexa's unified models: why is a unified data model important?

We are providing solutions regarding demand planning, supply chain, inventory, Sales and Operations Planning to our clients all over the world Since 1994. Adexa has at its core comprehensive planning, modeling and collaboration technologies, designed to bridge the gap between enterprise stakeholders, geographic locations, customers and supply chains.

Our Software models are build on Unified Data Model, People do ask us, why you prefer Unified modeling? why unified data model is important? Why to have unified data model?? We simply reply if you are using different softwares for different department which is directly or indirectly interconnected then which model must need to speak the same language, having a unified data model implies no translation is needed which saves time and other resources and help implementing the plans faster. 

Schedule a demo for Unified Data Model

• Attribute Based Planning
• Self-Improving & Self-Repairing®
• Deep Modeling & Dynamic Constraints
• Automatic Risk Analysis
• Scalable and Fast

In addition, Adexa planning applications allow analysis of the possible options that help in generating best output from available resources hence generate best possible revenue.

ADEXA taking Demand Planning to next level