Why is Demand Planning So Important?
/The fresh food and beverage industry is characterized by complex supply chain networks, fierce competitiveness, and small profit margins. But those manufacturers who can plan and predict demand for their product are much more likely to gain a competitive advantage. And this is where demand planning software steps in. Retailers lose more than $1 trillion globally each year as a result of overstock or out of stock situations, so you cannot underestimate the importance of demand planning. Demand planning software provides businesses with forecasting solutions that help them prepare for future customer demand. Here we outline the reasons why it has such a strong impact on predictions, productivity and profit.
1. Reducing Waste
Demand planning software provides its users with a systemic approach to how they plan, produce, source, and distribute their products across the supply chain. With accurate demand planning and forecasting tools at their disposal, food and beverage manufacturers can dramatically reduce waste and elevate their profit margins. An Enterprise Resource Planning (ERP) software system can detect defects or contaminations in the manufacturing process. And automated inventory management systems provide total visibility of future customer demand, enabling every food and beverage manufacturer to reduce waste.
2. Improving Customer Service
Happy consumers are loyal consumers. But it’s a challenging time for food and beverage companies; same-day shipping and near instantaneous delivery of products has become the norm. If your company is operating without a definitive demand planning operation, it’s impossible to maintain high levels of customer satisfaction. Stock outs and longer lead times frustrate customers and reduce brand loyalty. If you don’t invest in robust ERP, demand planning and traceability software, your competitors will poach your customers.
3. The Demands of the FDA
In September 2020 a new rule was proposed by the US Food and Drug Administration (FDA), establishing a list of foods which would require additional record keeping beyond what existing regulations demand. This new rule has been initiated to lay the foundation for vast ‘farm-to-table’ traceability across the US food industry. Demand planning software and traceability software can definitively meet the ever-increasing demands of the FDA. The software holds and presents all the key data — knowing for any item on a sales order, what purchase orders it connects to. For recalls, quality control, and customer satisfaction, traceability solutions stitch together the logistical and legal demands of a food and beverage operation. With the right ERP and traceability solution, everything is at the user’s fingertips. Cashmere’s software can precisely meet the ‘farm to table’ rules as instituted by the FDA.
4. Increasing Profit Margins
The numerous efficiencies gained through the adoption of demand planning software naturally lead to increased profits because they reduce waste and duplicative operations. Broadly speaking, the painful cycle of overstocking and under-stocking items is stopped in its tracks. Demand planning software simply pays for itself, through additional sales, increased profit margins and reduced waste.
If you want to gain a stronger grip on the demand planning side of your enterprise, get in touch with Cashmere today. Our inventory and order management software, purchasing software, demand planning software, and advanced ERP solutions are powered by AI and serve F&B clients around the world.
