Building a business is not a simple responsibility to handle. A business will be a big investment to get started that needs focus, dedication, and passion into it. These qualities must be combined to build a strong personality. It helps anyone to be prepared to run the business. But, before the business started, we may see a lot of flourishing businesses that remained standing in the market. They constantly competitive that made them become successful. Now, planning to build a business is not a simple decision to make. Before starting a business, it is expected that the goals of the business have been planned. Goals of the business should not be forgotten, as this will serve as a proof that the business is developing or not.
What should be the goals of a business?
Maximize the profits! How can this be accomplished from a supply chain? Better to check out some of the key factors of how the supply chain contributes to the company’s goals. The demand planning has a very important function. It guaranteeing operations to be efficient, timely, and cost-effective. To make sure that the availability of the product to maximize revenues within the market. Also, to know inventory as a tradeoff to tie up capital. Efficient planning of the demand requires various information to forecast the products. These various information talks about the timely, usable, quantitative and qualitative. To provide useful information is the end goal, it ensures proper planning demand.
Understand the products demand
This will go beyond the basic of what demand types are we seeing. For any provided product, there might be types of demands such as:
- dependent demand
- independent demand
- service parts demand
- interplant demand
Usually, forecasting independent and service parts demand is focused first. But, still, all the types of demand needs to be planned for the supply chain processes ensuring its availability when needed. Demand volatility is one of the top pain points. Generally, the more of knowing the demand for the products, the better forecasting will be.
How forecasting will fit in the process
Use forecasts and experience for estimating demand for a variety of items at various points in the supply chain. Generally, it comes up with various questions to get an answer, here is the following:
- Who is responsible for the forecasts?
- What are our products?
- Where are they in their product lifecycle?
- What is their demand pattern?
- Do we understand the volatility recognized in the marketplace?
- Who provides the additional information needed to establish an appropriate forecast?
In fact, it actually depends on a particular company. There can be additional questions that need to have an answer. For instance, a business consistently over forecasts various large product lines. This will lead to increased inventories and it lowers down inventory turns. When a company can’t recognize or notice this problem, planning of demand process will aid to understand what the inventory goals must be and why. An appropriate forecast needs to be on the right process for ongoing tracking and analysis.