Demand Planning

Why Manufacturers Have Embraced Demand Planning As a Way to Reduce Supply Chain Disruptions

When it comes to the lessons learned from the 2020 global pandemic, it appears many manufacturing leaders have realized the importance of technology as a solution to supply disruptions caused by future unexpected events.

Among the ideas eyed as a necessary tool to combat manufacturing supply chain challenges is demand forecasting, according to a recent survey of leaders in the manufacturing industry. Nearly all survey respondents, or 93 percent, said they experienced supply chain challenges as a result of the COVID-19 pandemic. While this may not come as a huge shock, it helps quantify just how comprehensively the pandemic affected the manufacturing industry.

Where does demand planning fit into reducing supply chain disruptions caused by unexpected catastrophes? Demand planning is a crucial component of the supply chain management process that allows a company to predict future customer demand and adjust supply to meet that demand. Demand planning uses historical data, statistics, and valuable information from past supply and demand periods to estimate a trend and predict future demand.

That’s a powerful weapon when you consider how manufacturing leaders said the global pandemic impacted the supply chain. In the industry survey, more than three-fourths of the respondents, or 76 percent, said the pandemic exposed weaknesses in their supply chain. The Supply Chain Resiliency report from Sikich and IndustryWeek explores the pandemic’s impact on manufacturers’ supply chain strategies and how companies are responding in the wake of the pandemic.

“While the COVID-19 pandemic created many challenges for manufacturers, it also gave companies an opportunity to identify and address weaknesses in their supply chains,” Debbie Altham, senior director on Sikich’s technology team, told Supply Chain Quarterly. “As they try to put the pandemic behind them, manufacturers need to seek better visibility throughout their distribution networks and improve supply chain efficacy by strategically implementing advanced technologies.”

According to manufacturers, the biggest supply chain challenge posed by the pandemic was late deliveries from suppliers.

As the global economy continues to open in the wake of the distribution of the COVID-19 vaccines, manufacturers are now looking forward to solutions to the supply chain problems to avoid a repeat of the disruption, or to at least diminish it. In the survey, nearly two-thirds of the respondents, or 63 percent, said they plan to increase investment in demand-planning software and other technology that can help them minimize supply chain disruptions.

Some companies have even turned to creating new positions for a demand planner or increasing their presence in top-level sales and product discussions. The demand planner helps develop trust and acceptance of forecasting, working across the company executive landscape to generate cross-functional partners and buy-in for the tools used to sharpen planning. These planners become critical members of the upper management structure and an important lead for executive sales and operations planning meetings.

There is no question that the COVID-19 pandemic forever changed many aspects of everyday life. In the manufacturing world, the reaction to those consequences could lead to more efficient and more reliable manufacturing networks that can sustain such unexpected events through increased demand planning and other solutions.