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by Daniel Harris,
Market Research Associate
Last Updated: December 7, 2016


Demand planning and forecasting software is used across industries by businesses of all sizes. The market for this software is continuously growing, and demand planning technology continues to evolve. Some vendors offer a complete supply chain planning suite with features such as inventory and replenishment planning, while others offer demand planning as an add-on or standalone feature.

This buyer’s guide aims to help you understand the features and functionality of demand planning and forecasting software in order to help you during the software selection process.

Here's what we'll cover:

What Is Demand Planning and Forecasting Software?
Common Features of Demand Planning and Forecasting Software
Market Trends to Understand
Benefits of Demand Planning and Forecasting Software
Evaluating Demand Planning and Forecasting Software

What Is Demand Planning and Forecasting Software?

Demand planning software allows organizations to minimize waste by tracking trends that will affect future demand. This type of system accomplishes the task by improving forecasting governance in order to eliminate errors or biases in the data and also by reducing data latency, which makes real-time demand planning possible.

In addition to procurement software and strategic sourcing software, demand planning systems are an important, cost-cutting element of supply chain management software.

Common Features of Demand Planning and Forecasting Software

Organizations can achieve two key objectives with the help of demand planning tools: an improvement in demand forecast accuracy and greater control over demand shaping.

Historical analysis Cross-functional or multi-dimensional forecasting processes analyze the historical demand for an individual product along with broader macro- and micro-economic trends to deliver an accurate forecast to supply chain executives.
Data separation The software gathers a wide range of data to improve past and future demand analysis. Filtering and separation occurs by product, customer, season and market information.
Demand shaping capacity The software factors in scheduling data related to promotions, advertising, planned product launches and upcoming competitor activity, accumulating and displaying detailed plans for future marketing campaigns as well as the projected effects on awareness, demand and revenue that will accompany them.
“What-if” analysis With all the information in the system, the software can perform a series of scenarios and simulations based on “what-if” factors. Based on the results of these what-if simulations, potential deviations from planned demand can be communicated to the necessary areas of the supply chain in order to adjust shipments or production.
Supply chain communication Demand planning systems communicates with other elements of the SCM system to renegotiate replenishment scheduling through capacity planning. This prevents unnecessary oversupply and cost inefficiencies by reducing inventory carrying costs and excess inventory write-offs.

Market Trends to Understand

Software as a service (SaaS). Many businesses are now opting for cloud-based systems that are hosted by the vendor and enable users to run the software entirely via web browser. Vendors that provide cloud-based demand planning and forecasting software include Fishbowl, SAP, S2K and Infor.

Digital monitoring. With the increasing globalization of the supply chain, companies face challenges such as delays, longer delivery times, degraded quality and higher costs. To tackle these challenges and maintain visibility and connectivity across the entire supply chain, many demand planning and forecasting software solutions offer a digital monitoring feature that provides real-time updates.

Artificial intelligence. The supply chain for global companies is complex and constantly evolving, which means it is susceptible to errors that can cost millions, if not billions of dollars. To combat this, some vendors are introducing features that are capable of finding and correcting both historic and live supply chain data. For example, vendor Rulex introduced an AI software solution in September 2016 that can automatically detect and correct errors in supply chain data.

Increased demand for third party integrations. Rather than having to purchase an entirely new system that covers every aspect of business operations, many buyers now seek solutions that allow them to easily import data, such as procurement, sales and operations, from their pre-existing software into the new solution without requiring extra manual effort.

Analytics. Demand planning and forecasting software vendors use different predictive models to improve the accuracy of demand forecasts. As a result, business intelligence software vendors with predictive analytics capabilities have started offering demand planning and forecasting software for supply chain application. For example, Qlik and Board BI have expanded their product offerings for the demand planning software market.

Benefits of Demand Planning and Forecasting Software

Demand planning and forecasting software can yield many benefits for organizations. These benefits include (but are not limited to):

Increased efficiency. A demand planning and forecasting solution helps increase the efficiency of a company’s supply chain and operations, improve capacity and manage inventory levels. These tools can also generate a demand plan based on historical data and predict future demand.

Improved collaboration. A demand planning system can help improve communication between a company’s supply chain and other areas of operations, including sales, marketing and finance. This can lead to the creation of action plans for different scenarios to enhance overall productivity.

Cost control. Demand forecasts reduce costs by preparing effective inventory-stocking plans. This feature prevents inventory overstocking while focusing on high-profit inventory items.

Trend analysis. In addition to controlling costs, trend analysis features can generate forecasts by capturing historical data and combining it with data related to seasonal variation and promotions. These forecasts can help prevent sales loss due to lack of inventory.

Evaluating Demand Planning and Forecasting Software

Evaluating demand planning and forecasting software requires an assessment of the functionality and its value to the planning process. It also requires an understanding of the efficiency, accuracy, and relevance of the data that is provided, since that data is key to the effectiveness of the system.

Key considerations when selecting demand planning software include:

  • What data does it collect and interpret?
  • How often is the data collected?
  • Will it be used by itself, or in conjunction with supply chain planning or a comprehensive SCM system? Is it compatible with legacy systems?

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