March 14, 2023

What is demand planning?


Do you find yourself struggling to keep up with customer demand for your products or services? Are you tired of constantly running out of inventory or wasting money on overproduction? If so, it's time to start mastering demand planning.

What is demand planning?

Demand planning is the process of predicting how much of a product will be sold in the future, and creating plans to support that estimated demand. This includes determining which products will be in demand, how many of each product will be needed, where the products will be sold, and how they will be processed through the company's distribution channels. Businesses use information from the past, like how much they sold before, and also information about what's happening now, like if there's a new trend or product that's popular. It's important to note that demand planning is an ongoing process that requires regular monitoring and adjustment. By regularly reviewing and updating their forecasts, retail brands can ensure that they are meeting customer demand and optimising their operations for long-term success.

Why do demand planning?

The goal of demand planning is to ensure that the right amount of product is available at the right time to meet customer demand while minimising waste and optimising inventory levels. Demand planning is an essential process for any retail business that wants to stay competitive and profitable. If a retail brand doesn't make enough of their product, they might run out and people won't be able to buy it when they want to. But if they make too much of it, they might end up with extra products that they can't sell, which can be expensive and wasteful. So by forecasting demand and optimising inventory levels, retail brands can avoid stock-outs and reduce costs.

In addition to improving inventory management and supply chain efficiency, demand planning can also help businesses improve customer satisfaction. By anticipating demand and having the right products available at the right time, businesses can reduce wait times, increase order fulfilment rates, and provide a better overall customer experience. This can lead to increased loyalty, as well as positive word-of-mouth recommendations.

How to structure demand planning?

Demand planning can be structured in several different ways, but here are the main steps that are typically involved:

1. Collect data: The first step in demand planning is to gather data about past sales, market trends, and other relevant information. This data can come from a variety of sources, including sales records, customer feedback, and market research

2. Analyse data: Once the data has been collected, it needs to be analysed to identify patterns and trends. This analysis can help to identify factors that are driving demand, such as seasonal trends, changes in customer preferences, or new product releases

3. Forecast demand: Based on the data analysis, demand planners can create a forecast for future demand. This forecast will take into account historical trends as well as any anticipated changes in the market or customer behaviour

4. Collaborate with suppliers and partners: Effective demand planning requires collaboration with suppliers and other partners in the supply chain. By working together, they can ensure that the right amount of product is produced and delivered at the right time

5. Adjust plans as needed: Demand planning is an ongoing process, and plans need to be adjusted as new data becomes available. By monitoring sales and market trends, demand planners can make adjustments to their forecasts and production plans to ensure that they are meeting customer demand

6. Utilise technology: Demand planning can be a complex process, but technology can help to streamline and automate many of the tasks involved. Advanced analytics and forecasting tools can help to improve the accuracy of demand forecasts, while automation can help to reduce errors and improve efficiency


Overall, the key to effective demand planning is to gather and analyse accurate data, collaborate closely with partners in the supply chain, and use technology to streamline the process. By doing so, companies can ensure that they are meeting customer demand and optimising their production and inventory levels to avoid waste, increase their revenue and stay ahead of competition.

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