6 Reasons Why Demand Planning is Crucial for Food Supply Chain

Businesses and industries dealing in food products revolve around the demand of customers or the market. The demand for different food products changes based on various factors such as seasons, locations, etc. Due to the perishable nature and temperature sensitivity of food products, businesses face multiple challenges while meeting customer demand. Similarly, overstocking or understocking of food products creates a significant impact on business. This is when the practice of Demand Planning becomes crucial. While maintaining a streamlined food supply chain, it is essential to focus on Demand Planning to meet exact customer needs. Demand planning and forecasting helps to recognise future demand and challenges, assume unexpected circumstances in the food supply chain and outline practical solutions beforehand. However, there are various reasons why businesses should implement demand planning in supply chain. As a supply chain management expert, RK Foodland has shared the most important reasons why demand planning is crucial for the food supply chain.

What is Demand Planning and Forecasting in the Supply Chain?

Demand planning and forecasting are procedures that help analyse and estimate future customer demand for particular food products and services. The estimations are made based on the relevant database, such as real-time and historical data, sales reports, market trends, customer behaviour, feedback, and many more. Demand planning immensely helps businesses optimise their stock levels, manage production, procure raw materials, and perform other operations. Business professionals with demand planning can outline different strategies to be competitive in the market by predicting future demand.

Why is Demand Planning Crucial for the Food Supply Chain?

∙ Prevent Stockout Situations

Stockouts often deteriorate the customer experience. To avoid such circumstances, businesses should opt for demand planning. It helps to analyse the amount of inventory required to meet the customer demands without stockouts or surplus products. Demand planning ensures that you order and maintain the right amount of inventory at the right time. By implementing demand planning in supply chain, business professionals can relax without worrying about stockout situations.

∙ Creates An Efficient Supply Chain

Last-minute rush, geographical challenges, and climatic changes cost expenses to the businesses. Demand planning effectively eliminates these problems and creates an efficient supply chain. Foreseeing the challenges helps businesses to stay prepared and respond at the right time to the changes. Adjustments in the supply chain at the correct time result in smooth supply chain operations. Proper futuristic planning helps to reduce unnecessary expenditure and hustle.

∙ Fosters Flexibility

Considering the unforeseen circumstances, businesses must make instant adjustments to deliver the products to the customer. Demand planning helps to make informed decisions regarding the allocation of resources and adjust operations on a real-time basis. The team can respond quickly according to the changes in demand. Similarly, sharing the demand forecast with other stakeholders in the supply chain improves collaboration and faster delivery.

∙ Customer Satisfaction

Customers feel good when the products are delivered at the right time and place. This increases the loyalty towards your brands, increases the number of repeated orders, and word of mouth. However, moving unplanned in the competitive market can affect your business growth as well as customer satisfaction. Stockout situations and delayed product deliveries frustrate customers. This creates a negative brand image in customer's minds, ultimately benefiting your competitors. Demand planning ensures product availability, which leads to customer satisfaction and better customer relationships. The right amount of stock availability keeps the food supply chain running smoothly, improving customer service.

∙ Reduces Wastage

Inappropriate planning and lack of understanding about customer demand increases the chance of product wastage. Implementing demand planning tools or software allows businesses to plan, produce, procure, and distribute products seamlessly throughout the supply chain. The software enables automated inventory management, predicts future customer demand, and analyses disturbances in the manufacturing process, helping to minimise wastage. Demand planning and forecasting tools by streamlining the supply chain help to reduce waste effectively.

∙ Increases Profit Margin

Proper planning to meet market demand increases the profit margin. It includes various factors such as better prediction, optimised inventory levels, reduced waste, streamlined operations, and many more. The supply of suitable products according to the customer demand minimises emergencies, wastage, and expense, positively impacting the bottom line.

 Demand planning and forecasting is an inseparable part of supply chain management. It offers businesses numerous advantages, resulting in a well-organised supply chain. If you are looking for a demand planning solution, RK Foodland is the right place. Since 1987, we have successfully served our clients with supply chain management solutions and outsourcing services. Apart from demand planning and forecasting, we also provide services such as sourcing, warehouse management, transportation services, order management, and integrated fulfilment. Our supply chain management experts understand your business as well as the challenges to provide a reliable solution that drives the desired results. Analysing the loopholes and customer demand, the professionals outline the demand plan to improve the effectiveness of the food supply chain.

Get in touch with RK Foodland for demand planning and forecasting today!