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Deciphering NetSuite Demand Planning

Effective demand planning is crucial for the organization’s fast-paced world. Accurately predicting customer demand can improve inventory management, production schedules, and customer satisfaction. This blog will explore how advanced enterprise resource planning (ERP) solutions like Oracle NetSuite can transform demand planning.

Demand planning means forecasting future demand for products or services using historical data, market trends, and other relevant factors. Accurate demand prediction helps businesses optimize inventory, avoid stockouts, and reduce excess inventory costs. However, traditional demand planning often relies on manual processes, which can be inefficient and inaccurate.

What are the issues of needing NetSuite Demand Planning?

No Balance in Supply and Demand
Without NetSuite Demand Planning, you face significant challenges in balancing supply and demand. This imbalance can result in either excess inventory or stockouts. Excess inventory ties up valuable capital and consumes storage space, increasing costs and inefficiencies. Stockouts can cause missed sales opportunities, dissatisfied customers, and potential loss of business to competitors. Balancing supply and demand is critical to operational efficiency and customer satisfaction, and lacking a structured demand planning system severely hampers this balance.

No Right Combination of Cost Control
Achieving the right combination of cost control is difficult without effective demand planning. You may need to spend more on holding excess inventory or face high costs due to expedited shipping and last-minute procurement when stock runs low. These reactive measures are often more expensive and less efficient than proactive Planning. NetSuite Demand Planning provides a structured approach to maintaining optimal inventory levels, ensuring you can balance cost control by reducing unnecessary expenses and avoiding costly rush orders.

No Accurate Lead Times and Service Level
Accurate lead times are crucial for effective Planning and scheduling. Without precise demand planning, you struggle with inaccurate lead times, leading to production delays and suboptimal service levels. These delays disrupt the supply chain, affecting manufacturing schedules, delivery timelines, and customer satisfaction. Poor service levels can harm your reputation and result in lost customers. NetSuite Demand Planning helps provide accurate lead times, ensuring smoother operations and better customer service.

There Is No Right Mix of Cost Control
Achieving an appropriate mix of cost control is difficult without effective demand planning. When you run out of stock, you may have to keep more inventory or choose between the higher expenses of expedited shipping or last-minute procurement. These reactive measures often cost more and are less efficient than being proactive in your planning process. NetSuite Demand Planning enables optimal levels of stock on hand, which assists in striking the right balance between cost control by minimizing unnecessary costs while avoiding expensive rush orders.

Lack Of Accurate Lead Times And Service Levels
Accurate lead times are critical elements for effective Planning and scheduling. Inaccurate lead times because of imprecise demand plans give rise to production delays and sub-optimal service levels. Moreover, these setbacks cause disruptions across entire manufacturing schedules, delivery timelines, and customer satisfaction ratings across a supply chain management practice happening within any organization dealing with various lines of products at all stages of their life cycle. Poor service levels can damage reputations and cause the loss of clients. By providing accurate lead times, NetSuite Demand Planning helps ensure smoother operations and improves customer services.

Inability to Make Informed Decisions
Without a robust demand planning system, you lack the necessary data and insights to make informed inventory and supply chain management decisions. This can lead to poor decision-making, such as overstocking or understocking products, misallocating resources, and inefficient supply chain operations. These issues impact product availability, operational efficiency, and financial health. NetSuite Demand Planning equips you with actionable insights and data, enabling you to make strategic decisions that enhance product availability and overall business performance.

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Key Benefits of Incorporating NetSuite Demand Planning Module

Increase Forecast Accuracy: NetSuite Demand Planning leverages historical data and advanced statistical models to enhance demand forecasts’ accuracy significantly. The system generates precise estimates by analyzing past sales trends, seasonal fluctuations, and other relevant data. This improved accuracy facilitates better planning and decision-making, leading to more reliable inventory management and reducing the risk of overstocking or stockouts.

Eliminate Obsolete Inventory: Improved forecasting and demand planning enable businesses to align inventory levels more closely with actual demand. By accurately predicting future needs, companies can avoid over-purchasing, which leads to obsolete inventory. This reduction in excess stock minimizes waste, optimizes storage utilization, and frees up valuable warehouse space for more profitable items.

Ensure Product Availability: NetSuite Demand Planning ensures that products are available when customers need them, effectively preventing stockouts. By maintaining optimal inventory levels based on accurate demand forecasts, businesses can meet customer demands promptly, leading to higher customer satisfaction and loyalty. This reliability is crucial for maintaining a competitive edge in the market.

Minimize Inventory Carrying Costs: NetSuite Demand Planning helps businesses minimize the costs associated with holding inventory by optimizing inventory levels. These carrying costs include expenses for storage, insurance, and handling. Reduced inventory levels lead to lower storage space requirements, decreased insurance premiums, and fewer handling operations, thereby saving costs and improving overall efficiency.

Eliminate Delays in Production: Accurate demand planning ensures that materials and components are available when needed, preventing production delays. With a clear understanding of future demand, businesses can schedule their production runs more effectively, ensuring a smooth manufacturing process. This reduces downtime, enhances productivity, and ensures timely delivery of finished products to customers.

Optimize Ordering with Planning Rules and Order Pegging: NetSuite Demand Planning offers sophisticated tools for optimizing the ordering process. Planning rules and order pegging ensure that orders are placed at the optimal time and in the correct quantities. This precision in ordering reduces excess inventory and avoids shortages, leading to a more efficient supply chain. Order pegging, in particular, aligns purchase orders with specific customer orders or production needs, further enhancing the efficiency and accuracy of the supply chain management.

Features of NetSuite Demand Planning

Forecasting
NetSuite Demand Planning offers robust forecasting tools that use historical data and statistical analysis to predict future demand accurately. With the demand planning process, you can evaluate and present demand in several ways:

  1. Linear Regression: Use past demand to predict future inventory needs based on a statistical method called ordinary/least-square regression.
  2. Moving Average: Calculate the overall average stock level needed using historical demand and then predict future stock levels based on this average.
  3. Seasonal Average: Analyze past demand to identify seasonal trends in inventory flow and use these trends to predict future stock levels.
  4. Sales Forecast: When using NetSuite for your sales operations, this method uses forward-looking sales data (such as opportunities and estimates) to predict inventory demand.

Item Setup
One of the most important parts of the planning process is setting the parameters for each item. This step ensures that the item is available for demand planning, establishes an alternate source item, and determines its distribution network and category. If you use distribution resource planning (DRP), these parameters allow inventory transfer between locations. Defining these parameters is crucial for efficient inventory management and smooth operation of the supply chain.

Multi-Location Inventory
Multiple inventory locations with real-time visibility can be easily set up for global businesses. These locations can be organized in a hierarchy, even by country. The system can automatically create transfer orders between locations during the planning process.

Allocation Exceptions Management
To handle supply shortages and VIP customers, you can check all supply sources and order allocations to ensure high-priority sales orders are shipped complete and on time. The system helps by giving smart recommendations to reallocate supplies, taking resources from multiple unallocated orders to fulfill priority orders first, and minimizing the impact on other orders.

Supply Planning
NetSuite Supply Planning helps balance supply and demand to meet customer orders as promised. The goal is to align supply with demand to meet your financial and service objectives. Supply plans provide a recommended schedule for buying or making items and suggest purchase and work orders based on lead times and expected demand.

Reorder Points
NetSuite uses Reorder Points to automatically create purchase, work, or transfer orders when inventory drops below a certain level. This helps keep stock at the preferred level. When set to auto-calculate, NetSuite considers historical data like item demand from sales, supplier lead times, and safety stock to determine the reorder point.

Time-Phased Planning
NetSuite Time-Phased Planning helps you plan demand when you know the repurchasing cycle. For example, if a supplier always delivers on a specific day of the week, you can prepare for this by calculating all the supply needed to cover demand for that cycle. Based on the delivery schedule, you can order and receive everything together.

Material Requirements Planning
NetSuite Material Requirements Planning (MRP) helps businesses determine what inventory is needed to meet demand, allowing them to optimize inventory levels and production schedules. It’s a standard method for balancing supply and demand. NetSuite MRP speeds up production by determining what raw materials, components, and subassemblies are needed and when to assemble finished goods based on demand and the bill of materials (BOM).

When to Implement NetSuite Demand Planning Module:

  • If your business relies on manual forecasting processes, it’s time to switch to NetSuite Demand Planning for more accurate and efficient forecasting.
  • Businesses experiencing unpredictable demand fluctuations can benefit from the module’s accurate capabilities.
  • If inventory imbalances are a constant challenge, implementing NetSuite Demand Planning can help achieve a better balance.
  • NetSuite Demand Planning provides businesses with complex supply chains the tools to manage and optimize supply chain operations.
  • Accurate demand planning is crucial when launching new products or entering new markets. NetSuite Demand Planning can help ensure successful product launches and market entries.

Conclusion

Adapting to change and building for the future requires robust and effective tools, and EmphoraSoft, the NetSuite ERP Partner, is here to help. With NetSuite Demand Planning, you can transform your demand forecasting, inventory management, and production scheduling processes. This advanced ERP solution enables you to balance supply and demand, optimize inventory levels, and enhance customer satisfaction, all while minimizing costs and inefficiencies.

Contact EmphoraSoft, the NetSuite Cloud ERP expert, to learn how we can help your business adapt to changes and build a solid foundation for the future.

FAQs:

NetSuite Demand Planning is a module within the NetSuite ERP system that helps businesses forecast demand, manage inventory, and optimize supply chain operations.

It uses advanced forecasting methods to predict future demand, helping businesses maintain optimal inventory levels, avoid stockouts, and reduce excess inventory costs.

It supports multi-location inventory management, allowing businesses to efficiently manage and transfer stock across various warehouses and distribution centres.

Accurately predicting demand and maintaining optimal inventory levels reduces unnecessary expenses such as excess inventory holding costs and costly rush orders due to stockouts.

It provides intelligent supply reallocation recommendations, prioritizing high-priority orders and ensuring they are fulfilled on time, even during supply shortages.

Time-phased Planning helps businesses plan demand based on known repurchasing cycles. It ensures supplies are ordered and delivered according to a schedule that aligns with the supplier’s delivery times.

It seamlessly integrates with other NetSuite modules, such as sales, purchasing, and inventory management, providing a unified approach to demand planning and supply chain management.

NetSuite Demand Planning optimizes supply chain operations by providing accurate demand forecasts, aligning supply with demand, and optimizing inventory levels. It offers tools for planning rules, order pegging, and material requirements planning (MRP), which enhance efficiency and accuracy in supply chain management.

NetSuite MRP determines the raw materials, components, and subassemblies needed for production, helping businesses optimize production schedules and meet demand efficiently based on the bill of materials (BOM).

NetSuite Demand Planning improves lead time accuracy by providing precise demand forecasts and aligning inventory levels with expected demand. This ensures that materials and components are available when needed, preventing production delays and enhancing service levels.

Businesses should consider it when facing challenges with manual forecasting, unpredictable demand, inventory imbalances, complex supply chains, or when launching new products and entering new markets.

NetSuite Demand Planning can benefit any business that deals with inventory management and supply chain operations, including manufacturing, retail, distribution, and e-commerce.

EmphoraSoft provides expert guidance and support to implement and optimize NetSuite Demand Planning, ensuring your business can accurately forecast demand, manage inventory efficiently, and improve overall supply chain operations.

Absolutely. EmphoraSoft specializes in customizing NetSuite solutions to align with your unique business processes and requirements, enhancing efficiency and productivity.