Enhancing forecast accuracy with the Demand Planning App in Dynamics 365 SCM  

June 20, 2024

A business’s success is fundamentally tied to its ability to meet customer demand, and an efficient supply chain is crucial in achieving this. In supply chain management, achieving efficiency and profitability hinges upon the accuracy of demand forecasts and plans. Traditional methodologies used for forecasting prove inadequate, leading to a multitude of inefficiencies that negatively impact a company’s bottom line. Gartner revealed that only 45% of sales leaders are confident in their organization’s forecasting accuracy. This skepticism can result in decisions based on intuition rather than evidence, often leading to compromised outcomes. Conversely, overestimating demand leads to excess inventory, disrupting operations and increasing operational expenditure.

Fortunately, advancements in technology offer a solution to these challenges. The demand planning app for Microsoft Dynamics 365 Supply Chain Management provides a powerful suite of tools designed to empower businesses with intelligent forecasting and collaborative demand planning.

This blog post will explore Microsoft’s next-generation Dynamics 365 SCM demand planning app, which empowers businesses to rely on data-driven insights for a profitable and responsive supply chain.

What is demand planning in supply chain management?

Demand planning in supply chain management refers to predicting future customer demand for a product or service based on historical sales data, market trends, and other relevant factors. This critical function goes beyond simply making a guess. It is a thorough process that leverages a multitude of data sources to create a reliable forecast. The goal is to ensure the supply chain operates efficiently and meets customer demands without incurring unnecessary costs.

However, as consumer preferences evolve and market trends fluctuate, the significance of proactive demand planning becomes increasingly evident in sustaining competitive advantage.

Inventory optimization

Effective demand planning ensures that inventory levels are maintained at optimal levels. By accurately predicting demand, businesses can minimize excess inventory, which ties up capital and increases storage costs, and avoid stockouts, which can lead to lost sales and dissatisfied customers.

Cost reduction

Precise demand forecasts enable companies to plan their production schedules and procurement activities more efficiently. This leads to better resource utilization, reduced waste, and lower operational costs. Companies can avoid the costs associated with emergency production runs or expedited shipping due to unexpected demand surges.

Improved customer satisfaction

Reliable customer demand meeting is key to maintaining high customer satisfaction. Accurate demand planning helps ensure that products are available when and where customers need them, leading to higher customer loyalty and repeat business.

Enhanced decision making

The demand planning app in Dynamics 365 SCM provides critical insights that support strategic decision-making. By clearly understanding future demand patterns, businesses can make informed decisions about product launches, marketing strategies, and capacity planning.

Risk management

By anticipating demand fluctuations, companies can better manage risks associated with supply chain disruptions. Effective demand planning allows for the development of contingency plans and more resilient supply chain strategies.

Intelligent demand planning with Microsoft Dynamics 365 Supply Chain Management

With Microsoft’s demand planning app in Dynamics 365 SCM, organizations can build an agile, resilient, and sustainable demand planning practice that’s driven by intelligence and collaboration. Moreover, this app is powered by top-tier algorithms and models that offer users a seamless, immersive experience, intelligent reports, and analytics.

In addition, by leveraging cutting-edge algorithms and fostering a data-driven approach, this app can significantly improve forecast accuracy, reducing stockouts and excess inventory. This translates into a more streamlined supply chain, improved customer satisfaction, and ultimately, a healthier bottom line.

Dynamics 365 SCM demand planning app features

The following features of the demand planning app in Dynamics 365 SCM enhance efficiency and accuracy in supply chain operations.

  • It eliminates the necessity for coding expertise in demand modeling and planning configuration. This user-friendly interface, comprised of flexible building blocks, empowers the vast majority (exceeding 85%) of demand planners to conduct what-if planning, analyze, optimize, and compare various scenarios within a short timeframe.
  • It facilitates seamless aggregation and disaggregation of forecasts in real-time. Planners can modify forecasts at the corporate or product group level and then drill down to instantly observe the corresponding effects at the organizational, regional, and stockkeeping unit (SKU) levels.
  • This application delivers enhanced forecasting accuracy through automated AI parameter tuning. This advanced technology optimizes forecasting models for superior results. Furthermore, by incorporating alerts or signals such as promotional activities and stockout occurrences, the app provides a more comprehensive picture, leading to more accurate predictions.
  • The D365 demand planning app fosters disruption readiness through interactive what-if analysis, enabling rapid exploration of diverse potential scenarios. Furthermore, version history facilitates the tracking and evaluation of adjustments made to forecasts. By leveraging these capabilities, organizations can continuously enhance their decision-making processes.
  • Microsoft Teams’ in-context communication, in-product commenting, and ability to restore forecast values at any stage of the planning process facilitate effective collaboration throughout the planning cycle.
  • Enhanced agility is achieved through an integrated planning and execution workflow featuring native integration with Supply Chain Management, customizable worksheets, and exception-based planning.

Dynamics 365 SCM demand planning app workflow: Step-by-step approach

Optimizing supply chain with Dynamics 365 demand planning app is a strategic approach to enhance accuracy in demand forecasting by leveraging advanced analytics and real-time data integration. The Demand Planning app provides functionality for the complete demand planning process, transforming how businesses anticipate and respond to customer needs. It empowers users to move beyond static spreadsheets and embrace a dynamic, data-driven approach.

The demand planning process comprises the following steps, each of which contributes to a more efficient, responsive, and profitable supply chain.

Step 1: Import data

The first step involves importing your historical data, product information, sites, warehouses, prices, etc., from various internal and external sources.

Step 2: Create transformations

Once the data is imported, it is transformed according to the raw imported data. Transform imported data table into time series by selecting the appropriate data columns, determining time intervals, and adjusting dates. For instance, you can use last year’s historical data for the upcoming year as a forecasting foundation. Additionally, you can apply multipliers or merge data from various systems.

Step 3: Create forecasts

Developing accurate forecasts involves selecting the most suitable options for your forecast calculations, using your imported and processed data. You can use your Azure Machine Learning model or let the AI decide the right forecasting model.

Step 4: Review and adjust forecast

Once the forecast has been created, you can refine it by adjusting values and considering the potential impact of factors like pricing strategies, weather patterns, and promotional campaigns. Collaborate with your team to achieve the most accurate forecast possible.

Step 5: Export data

The last step in the D365 demand planning app process after the forecasting is done is to export data to an external system that can consume forecasts. Upon finalizing the forecast and achieving the desired level of accuracy, the data can be exported and subsequently used as a foundational resource for your demand planning efforts.

Achieve supply chain excellence with Dynamics 365 SCM demand planning app consulting

The Demand Planning application, seamlessly integrated with Microsoft Dynamics 365 Supply Chain Management, emerges as an advanced solution for businesses seeking to refine their forecasting and demand planning processes. The ability to integrate the Demand Planning app with Dynamics 365 Supply Chain Management ensures a smooth transition from forecasting to execution, fostering real-time data exchange and effortless collaboration across departments.

Ready to transform your demand planning process? Contact Confiz today at marketing@confiz.com to schedule a Dynamics 365 Supply Chain Management demo and see how our team can help you implement this advanced solution.