What is Demand Planning?
Think of demand planning as your Shopify business’s crystal ball. It helps brands predict what customers will want in the future, ensuring that they have just the right amount of product on hand.
There is no magic involved—just good analysis of what’s been selling and trends in your market.
Demand Planning vs. Forecasting: Explain it like I was five years old
Forecasting is all about numbers—predicting sales based on past data. Demand planning is built on top of the initial inventory forecast. It’s about taking those predictions and making smart decisions across businesses and brands to meet the future sales.
Imagine demand planning and inventory forecasting as inventory management’s balancing act. They move together, ensuring businesses have just the right amount of stock—not too much, not too little.
How Does Demand Planning Work?
The demand planning process is like putting together a puzzle. You start with collecting data (each piece of the puzzle), then predict sales (seeing the picture come together). Next, you get everyone to agree on the picture you’ve made.
With this shared vision, you create a plan that touches everything from marketing to how much product to make. Finally, you put this demand plan into action and keep an eye on it, ready to adjust pieces as needed. For fashion D2C brands, the right apparel inventory management system can create an accurate demand plan.
Within Prediko, it’s super simple to create a demand plan based on your historic sales - A simple 1-click integration with Shopify.
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Key Components of Demand Planning
- Data Analysis: It all starts with the numbers. Understanding your sales history and market trends helps you make educated guesses about future demand.
- Technology and Tools: Today, we have the top demand planning software that can crunch these numbers, make the whole process easier and more accurate than ever.
Here is a list of the top 10 inventory forecasting apps and tools on the internet today (there is a separate list of Shopify app stores within this list)
- Collaboration: It’s a team effort. Sales, marketing, production, and finance all need to work together, using the forecast to guide decisions across the business.
Overcoming Demand Planning as a Challenge
The biggest hurdles include making sense of mountains of data and staying agile in a market that’s always changing.
The key: Don't get bogged down.
When Kate Hewko, a fashion powerhouse for the past 10 years, was struggling with planning properly for their demand.
They signed up for Prediko. Our AI based Smart Plan helped them to predict demand patterns easily with precision boosting inventory efficiency by 40%.
With the help of timely planning, they were easily able to replenish stock on time and also avoid stock outs.
Demand Planning & Supply Planning: Two Sides of the Same Coin
While demand planning predicts what customers will want, supply planning makes sure you’re ready to deliver to that demand. It’s about checking what you can make with what your customers will buy.
Demand Planning in Supply Chain Management
In the big picture sense, demand planning is the cornerstone of efficient supply chain management.
It ensures that every part of the business is aligned, from procurement to sales, making sure that the right products are in the right place at the right time.
It's important to factor in your raw material plan while creating the right demand plan. That's why we have created this list of the top raw material management apps in the Shopify ecosystem.
Why is Demand Planning crucial for Shopify D2C stores every quarter?
A good demand plan every quarter means that you’ll never be caught off guard.
It helps you to keep costs down, make your customers happy, and your business nimble enough to take on whatever comes your way. By forecasting demand and planning accordingly, you’re always one step ahead.
