Choose the Right ERP System for Better Demand Planning

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Accurate demand planning is the key to staying efficient and competitive. With reliable inventory forecasts that factor in uncertainty about the economy and shifting consumer behavior, businesses can stay on top of trends without burdening themselves with unneeded inventory.

The right ERP system can be a huge help in this area—improving forecasting, which allows for adjusting lead times, which, in turn, keeps the supply chain running smoothly. With the right ERP system, when you get ready to order an item, you have all the information you need to order intelligently. You start by reviewing historical and seasonal data by item and item group. You then decide what external factors might influence that number. You can look at numbers from last year as a starting point, and although an ERP system can’t predict external events, it can at least help you do the math.

Another big piece of the puzzle in demand planning is lead time, which depends heavily on the reliability of your suppliers. A good ERP system can help manage their performance information so you can make changes as necessary to keep your supply chain running smoothly. The ERP system factors in the vendor’s lead time when anticipating inventory replenishment as part of its other calculations—the challenge is to get the correct data about the vendor, which is why you need an ERP system that has vendor performance analysis capabilities. These include the ability to track purchase orders, price increases, order lead times, etc. This makes it easier for you to compare vendors.

External events such as weather and political events can also affect your inventory and supply chain. A good ERP system will help alert you to these trends, so you can minimize supply chain disruption. Another way to minimize disruption is to include your vendors’ forecasting data, such as anticipated ship dates or their projected lead times in your ERP system. This will help you avoid stock outages and other little “disasters” along the way.

With ever growing demands on you, the right ERP system can greatly improve demand planning.

By ArcherPoint, LLC, a Northern California Microsoft Dynamics NAV (Navision) partner.

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