Demand Planning

Pakk helps you go from historical sales data, through demand model to final purchase order sent to supplier, all in a matter of minutes. Here’s how.

Introduction

In a busy physical-product business, working out how much to buy of each product is a key element to business success. Business owners need to balance a whole host of complex requirements when restocking, for example:

• Try not to be out of stock of any products at any point in time

• Don’t tie up too much working capital in stock that sits in storage for long periods

• Take into account supplier and delivery lead times

• Don’t overstock limited-shelf-life products, leading to disposal of expired stock

• Take into account seasonality patterns and time of year

• Take into account any unusual, one-off events like promotions (e.g. Black Friday)

• Take into account supplier ordering requirements like pack sizes, minimum orders, minimum weights

• Take into account transport requirements, like maximising van space, pallet space or pallet grouping

Given all the above considerations and the specificity of requirements of each business, working out how much stock to order, or “demand planning” is a real challenge, and is part science and part art. In our experience, for a small business with complex requirements in stock ordering, this task tends to get “siloed” - only one or two people, usually the owner, know how to skillfully order stock.

Why Don’t Small Businesses Use Demand Planning Tools?

Demand planning means using historical data to predict future sales so that you can replenish your stock in an efficient way. In our experience, very few smaller businesses practice formal demand planning - instead preferring to rely on much simpler stock replenishment techniques like:

• Guesswork: where someone familiar with the business just guesstimates how much to order

• Same order each time: just order the same amount of stock each week/month

• Last minute panic: discover they’re out of stock and phone in an emergency order

This is probably the case because the types of sophisticated software that enterprises use to create statistical demand models and plan their reordering are far out of reach of most small businesses, plus their complexity can be overwhelming and integration with e-commerce/ERP systems a headache.

Pakk seeks to remedy all that with an intelligent, built-in demand planning tool that is minimal, useful, integrated and easy-to-use. Here’s a rundown of how it works.