Making sure that your inventory has the right products at the right time and at optimal stock levels involves demand forecasting, inventory tracking, and various other factors.
Demand planning for retail is a strategic process that enables you to achieve this in a collaborative manner across multiple departments such as sales, marketing, finance, and supply chain.
But, developing such a plan should begin with understanding your target audience at the store level.
This article will guide you to effectively strategise tailored demand planning that works across multiple stores at different locations.
What is demand planning?
Demand planning is a supply chain process that predicts future customer demand to ensure the right products are available in the right quantities at the right time.
Demand planning isn’t just about forecasting but the process involves multiple layers – analyzing historical data, forecasting future demand, and aligning supply chain operations to meet anticipated customer needs efficiently.
By proactively managing demand, retailers can optimise inventory, minimize costs, and improve customer satisfaction.
This holistic approach would ensure that you choose the right product, stock the optimal product mix and the store is well-prepared to meet demand fluctuations.
How to develop a demand planning strategy
Creating an effective demand planning strategy involves a structured approach that integrates data, technology, and collaboration.
These are the key steps to develop a robust demand planning process:
1. Forecast Demand
Demand forecasting is the backbone of demand planning by providing the necessary data-backed insights to make informed decisions.
By utilising machine learning algorithms & location data with GeoIQ’s location intelligence platform, you can analyse the buying behaviour of your customers and curate tailored product merchandise for various stores across locations.
Also, with geographic data, you can break down demand by product categories, customer demographics, and geographic regions.
You can then tailor demand planning strategies to address the unique needs and preferences of each segment.
| Related: Read how GeoIQ’s location data helped strategise merch-mix strategy that boosted sales by 45% for a leading brand!
2. Spotting trends early
Consumer preferences shift rapidly, and the ability to pre-plan for upcoming trends is important.
GeoIQ’s location intelligence platform enables you to detect emerging trends early and capitalise on upcoming market opportunities.
We further empower your demand planning strategy by:
- Providing hyperlocal, real-time interventions for better merchandise decisions.
- Combining external data and geospatial attributes to optimize store-level and SKU-level merchandise planning.
- Offering a faster iteration cycle, allowing your businesses at different locations to adapt to dynamic market conditions.
Book a 15-minute demo with us to see how we can transform your demand planning and merchandise strategies with AI!
3. Collaborate across departments
Demand planning is most effective when it’s a cross-functional effort.
Involve management team from sales, marketing, finance, and operations to align on goals and assumptions. Each department’s input provides valuable perspectives that could contribute to a more comprehensive plan.
Establish clear communication channels and regular updates to ensure all teams are aligned and working towards common objectives.
In short, collaboration fosters better decision-making and improves the overall effectiveness of the demand planning process.
4. Leverage ERP systems
Modern demand planning heavily relies on technology to improve accuracy and efficiency, as highlighted in our discussion on the importance of location data in this process.
Similarly, utilizing enterprise resource planning (ERP) systems enables real-time inventory monitoring and automates repetitive tasks, allowing teams to focus on strategic decision-making.
5. Monitor key metrics
To measure the success of your demand planning strategy, track key metrics such as:
- Forecast accuracy: Evaluate how closely your predictions align with actual sales.
- Inventory turnover: Monitor how efficiently inventory is moving through your system.
- Customer satisfaction (CSAT score): Ensure that customers consistently receive the products that they need without delays or shortages.
Regularly reviewing these KPIs will help identify areas for improvement and ensure your demand planning strategy remains intact.
6. Focus on scalability and adaptability
As your business grows, your demand planning strategy should be able to scale alongside it.
Regularly update your processes to incorporate new data sources and growing market conditions. A flexible approach ensures that your business remains responsive to customer needs and resilient in the face of change.
7. Develop contingency plans
Though the demand planning would be perfect, it is vital to prepare for potential disruptions such as supply chain delays, economic downturns, or sudden demand spikes.
Use scenario planning to test the resilience of your strategy under various conditions. Also, maintain a buffer of safety stock to handle unforeseen circumstances.
Why demand planning is necessary?
1. Improves customer satisfaction
Demand planning ensures the products that your customers love are available when and where customers need them. This in turn builds credibility and trust for your brand which encourages repeated visits to your store.
2. Optimises inventory levels
With a clear understanding of the SKUs your customers expect at each store, you can avoid overstocking, freeing up capital and reducing storage costs. This also minimizes understocking, which can lead to lost sales and disappointed customers.
3. Improves financial performance
A proper inventory process with demand planning will help align production and procurement with actual demand. This reduces unnecessary spending on products that your customer may not need. By freeing up costs by avoiding excess inventory you can expect an improved cash flow and profitability.
4. Supports strategic decision making
By streamlining supply chain operations, you will have valuable insights for launching new products, entering new markets, or scaling operations. Having strategic demand planning on your side facilitates long-term planning by identifying trends and potential risks.
5. Reduces operational risks
Streamlining the supply chain process proactively addresses demand volatility and mitigates the impact of sudden market changes. With improved agility, you can pivot product assortment and other marketing strategies easily.
Conclusion
Demand planning is an essential process for businesses seeking to align supply chain operations with customer needs.
Leveraging a location intelligence platform paired with greater team collaboration will help strategise the demand planning process much smoother and effectively.
Book a demo with us to see how our solution can optimize your demand planning strategy.