How to NetSuite: NetSuite Demand Planning

NetSuite has consistently served product-based businesses, offering a rich array of features, functions, and processes.

One such feature is NetSuite's Demand Planning, a powerful module that empowers users to predict required inventory based on historical demand or sales forecasts. This innovative tool strikes the perfect balance between robust functionality and user-friendly design, giving you the power to manage your inventory with unprecedented efficiency and control.

(Graphic source: Oracle NetSuite media source content, used with permission.)

Demand can be evaluated and presented using the demand planning process in several ways. The planning process can be structured to show calculating demand methodology, reviewing the demand plans and editing where required, generating the supply plans, reviewing and editing those, as well as generating planned Purchase Orders, Transfer Orders, and Work Orders as per the Generate Supply Plans. NetSuite can be configured to create actual transactions and skip planned orders when needed.

Demand Planning Methods

 Demand plans record the expected future demand for an item based on previous or projected demand. These projections can be based on the modeling methods shown below:

•  Using Previous demand to project future inventory (via Linear Ordinary Least Squares) Regression
• Using the moving average of historical demand - requires calculating average stock levels and making future stock level projections using that average.
• Using previous demand to examine seasonal inventory trends - similar seasonal trends are projected to determine future stock levels.
• Based on NetSuite sales operations – NetSuite then uses forward-looking sales forecasting to project inventory requirements. This method is advantageous when you want to align your inventory with your sales forecasts for the upcoming periods.

NetSuite uses this forecast data to project estimated demand across a designated period in the future and suggests a plan for orders accordingly.

Generating Supply Plans

 Supply plans record the suggested schedule for purchasing or manufacturing additional supplies of an item. The supply plan lists suggested Purchase Orders and Work Orders to augment item supply based on lead times and expected demand.

Supply plans can be generated using the item settings from the demand plans with a simple click, reducing time-consuming manual processes. NetSuite can generate planned, firm, or released orders depending on some parameters and approval workflows.

Using demand and supply plans helps you maintain an optimal inventory level for items with fluctuating demand.

 NetSuite Demand Planning Workflow

 NetSuite typically forecasts demand using the following workflow. 

1. Set up the Demand Planning feature.
2. Calculate Demand for Items.
3. Review the calculated Demand Plan
4. Generate Supply Plans for Items.
5. Review the generated Supply Plans.
6. Order Items.

Generating Planned POs, TOs, and WOs

The planning process simplifies creating Purchase Orders, Transfer Orders, and Work Orders for the user, who can be notified in several ways when they have Reminders, Email Alerts, Saved searches, and Scheduled Reports to handle.

(Graphic source: Oracle NetSuite media source content, used with permission.)

From the Order Items or Mass Create Work Order screens, it is as simple as checking a box beside the orders you want to create and hitting the Submit button to execute the orders.

 Skipping Planned Orders When Needed

To respond to preferred customers during times of supply shortages, you can review all sources of supply and order allocations to ensure that high-priority sales orders ship complete and on time. To minimize the effect on all orders, NetSuite provides intelligent supply reallocation recommendations to take the resources from multiple unallocated orders and fulfill priority orders first.

NetSuite-generated reallocation recommendations reduce the time needed to find, review, and execute reallocations. After you accept a recommendation, NetSuite automatically re-aligns the supplies to the affected orders.

However, if the recommendations you generate are unsuitable, you can develop new allocation recommendations. You can then review reallocation scenarios until you define the right solution. 

Wrap-up

To learn more about NetSuite's Demand Planning features and potentially become one of more than 41,000 NetSuite customers, visit their ERP webpage.

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