DEMAND PLANNING is one of the most frustrating and misun- derstood of any supply chain discipline. Yet the ability to accurately forecast how much
demand there will be for a certain product at a certain time of the year in a global
marketplace is critical in the food supply
chain and essential to business success.
Without this ability, suppliers risk having
product shortages that may result in lost
business or product surpluses that can
lead to waste.
Enterprise Resource Planning (ERP)
solutions can remove some of the guesswork in predicting demand, allowing suppliers to effectively plan and ensure sufficient on-time deliveries
for their customers.
The traditional supply chain is designed to
respond—not to sense.
As such, traditional supply chain companies are
finding it increasingly difficult to adapt to accommodate demand fluctuations and volatility.
Conversely, ERP solu-
tions, such as LINKFRESH,
ERP solutions can analyze 12-18 months
of historic production, shipment, order,
and channel data to forecast a known
outcome, which is used in conjunction
with current live orders and EDI data.
In regular production environments,
planning can often take place overnight
for the next day using ERP systems and
a planner who can amend schedules as
needed before jobs are started. In the
fresh food industry, production can frequently be well underway before the daily
EDI orders arrive, that include additions,
reductions or changes. In these cases, it is
vital that production jobs already underway can be dynamically re-planned. This
is where an ERP solution can use “Pack
Ahead Planning” functionality, which
introduces the concept of a “Pack Ahead
Profile.” This permits the business to specify what proportion of forecasted demand
is to be produced on the day of the
requirement, versus what proportion can
safely be packed ahead. Labor fluctuations and ‘short shifts’ can also be planned
for in advance.
A number of other factors must be
taken into account, the first and perhaps most obvious of these is changing
demand linked to seasonality. For example, demand for strawberries is likely to be
high in the summer and decrease over the
winter months. ERP data can provide fresh
food suppliers with information on overall
demand trends and give them the information they need on seasonal peaks and
troughs in demand.
Of course, seasonal demand may vary
on a product-by-product basis. For exam-
ple, seasonal demand for strawberries may
not be mirrored by that of eggs. ERP allows
users to fine tune their demand forecast-
ing and view demand data on a product-
by-product basis, ensuring that inventories
can be appropriately stocked throughout
the year. Data can be divided into demand
streams, such as slow-moving seasonal
items, fast-moving volume products, new
products or special promotions.
It is important to note that there are a
number of high-end demand planning
toolsets available in the market. These
tools use formulations based on statistical models and seasonality among
other methods and output a model that
smooths out the peaks and valleys in
order to reduce excess inventory on hand
while still maintaining good safety stock
and customer service. The source data for
these demand planning toolsets comes
directly from your ERP system.
In summary, the demand planning
functionality now available in today’s ERP
solutions can help ensure that suppliers
are prepared to meet shifting patterns
of demand across a range of indicators,
ensuring they keep customers happy and
maximize their own profitability.
Planning for materials, labor and capacity is fundamental to the food supply chain
process, and solutions like LINKFRESH ERP
provide the platform to ensure that this
planning can be done as accurately as
possible all year round. However, just as
a car requires frequent tune-ups to keep
it accurate, so does the demand planning
Ron Myers is executive vice
president at LINKFRESH. He can be
reached at email@example.com.
SUPPLY AND DEMAND PLANNING
Effective demand planning can keep consumers happy and maximize retailer profitability.
By Ron Myers