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
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