July 17, 2023
Structure of demand planning model
In this video, we will discuss the three critical elements of the demand planning model structure: horizon, frequency, and granularity. We will explain why these elements are important and how they can be used to improve the accuracy and efficiency of demand planning.
Demand planning is a critical process for any organization that wants to ensure that it has the right amount of inventory to meet customer demand. However, demand planning can be a complex and challenging process. One of the most important aspects of demand planning is getting the structure of the demand plan correct.
The three critical elements of the demand planning model structure are horizon, frequency, and granularity.u003cbru003e- Horizon refers to the time period over which the demand plan is created. The horizon should be dictated by the lead times of the decisions you are trying to make. For example, if you are making production decisions, the horizon should be long enough to account for the lead time of production.u003cbru003e- Frequency refers to how often the demand plan is updated. The frequency should be dictated by how frequently the drivers of demand are changing. For example, if the drivers of demand are changing on a weekly basis, the demand plan should be updated weekly.u003cbru003e- Granularity refers to the level of detail in the demand plan. The granularity should be dictated by the decisions you are trying to make. For example, if you are making inventory decisions, the granularity should be fine enough to account for the different SKUs that you sell.
Getting the structure of the demand planning model correct is essential for ensuring the accuracy and efficiency of demand planning. By understanding the three critical elements of horizon, frequency, and granularity, you can create a demand plan that is fit for purpose.
