Different views of demand planning

Supply chain planning is a crucial tool that guides a company's decisions, being fundamental to ensuring the achievement of its logistics and production objectives with efficient use of resources.

In order to meet these objectives and plan their actions, companies spare no effort in estimating market demands over long time horizons and with a high degree of detail about products and geographic dimensions. Immersed in this sea of ​​information, however, it is often difficult to know how to use the data for applications in different types of planning. It is common to get lost in the use of broader views, easy to absorb, but with less practical application, and extremely detailed analyses, of greater usefulness, but with a high degree of error and high effort.

To avoid falling into these traps, it is necessary to first understand what decisions are to be made by each area receiving the planning, and what information they actually need to prepare adequately for the short, medium and long term.

In the short term (the following three months, for example) where actions occur over an immediate time horizon, decisions are of a very operational nature. Management needs specific information, such as detailed demand forecasts by SKU, CD or even customer, as it is almost time to sequence production, assemble stocks of raw materials, PA and packaging and define commercial routes. An effort is therefore needed to bring useful and detailed information to these areas.

When looking at a more distant horizon, the story is different. Pointing out what will happen in a period further away from the current one is much more complicated, especially at more detailed levels. This high uncertainty means that companies can put aside longer planning, focusing on what is most certain and predictable. However, a more consolidated vision can also serve other plans. An analysis by product family or broader geographic areas (such as regions or countries) can be very useful for planning marketing actions, negotiating with suppliers, replacing equipment and defining commercial goals.

Figure 1- Different views of demand planning serve different purposes. Source: ILOS

In relation to the long term, for a year or more, the information on total volumes estimated by a simple statistical forecast already serves as a starting point for more strategic discussions such as large storage and transportation capacities (which depend little on the type of product or customer). ), mergers and acquisitions, technology adoption and financial planning.

So, by balancing the need for precise short-term details with the broader long-term vision, companies can make the most of the power of supply chain planning, ensuring a successful journey. 

If you want to know more about the subject, ILOS offers the Demand Planning Course, find out more at ilos.com.br/cursos-e-eventos/planejamento-da-demanda.