The success of inventory-based businesses today relies on achieving the perfect balance of supply and demand. This equilibrium enables businesses to have enough products to meet consumer needs while reducing waste and excess costs. To achieve this, businesses turn to demand planners, who use a mix of data analysis, strategic insights, and collaboration to predict future demand for products and use those predictions to inform buying habits.
Whether you’re new to demand planning or you’re a seasoned expert, this space is rapidly changing, and there are many definitions you need to be aware of. Here’s an ultimate demand planner dictionary of key terms that you need to know to operate in this space.
Key Demand Planner Terms and Definitions
Artificial Intelligence (AI)
Artificial intelligence (also stylized as AI) refers to machines that are programmed to simulate humanlike intelligence. AI is not one program: it’s an underlying technology used in many different tools and systems today. Artificial intelligence can be used to analyze data, recognize patterns, make decisions, and even improve its performance over time. The goal of AI is to enable machines to mimic human intelligence, and it can understand and replicate natural language, recognize images, play games, and make predictions. When it comes to demand planners, artificial intelligence can carry out processes such as forecasting, data collection, report generation, and much more.
Blockchain
Blockchain is a decentralized, secure, and transparent technology that is used to track and verify transactions across a distributed network. Originally rising in popularity in the cryptocurrency space, blockchains’ uses have expanded due to their ability to record data in a way that is tamper-resistant and transparent to all stakeholders. In terms of demand planners, blockchain can be used to record supply chain transactions (such as orders and shipments), can enable seamless data sharing, and can improve traceability and transparency.
Budget
A budget is a financial plan that outlines expected revenue and expenses over a particular period. Budgets are typically created on a quarterly or yearly basis, and serve as a tool for managing finances, setting financial goals, and allocating spending resources. Budgets allow demand planners to allocate resources effectively and monitor spending.
Cloud
The cloud is a remote network that is used to store, manage, and process data over the Internet. It’s an alternative to relying on physical servers or personal devices. Cloud computing enables computers to remotely access and use software, storage, and processing power.
Demand Forecasting
A demand planner practices demand forecasting, which is the process of predicting future demand for a product. It involves analyzing historical sales data, market trends, consumer behavior, and other factors (such as seasonality and promotions) to anticipate how much of a certain product will be needed. Demand planners typically use specialized supply chain software to generate and monitor their demand forecasts.
Demand Signal
A demand signal refers to the data or indicators that provide information about consumer demand for a product. It demonstrates real-time consumer behaviors and can reflect shifts in consumer purchasing behavior. These signals allow demand planners to monitor and respond to demand fluctuations.
Exclusions
Exclusions refer to pieces of data that are intentionally left out of reports and analysis. This is often because the data has been deemed inaccurate or irrelevant and therefore the omission prevents inaccurate reports.
Forecasting
Forecasting is the process of predicting future demand, events, trends, or outcomes based on historical, data, and insights. In the context of demand planning, it typically refers to predicting future demand for products.
Forecast Accuracy
Forecast accuracy refers to the degree to which a forecast (such as a demand forecast for a certain product) matches the actual outcomes. It’s a critical metric for evaluating the effectiveness of forecasting models and methods.
Generative AI
Generative AI is a branch of artificial intelligence technology that can create entirely new content, such as text, images, music, and videos. Unlike traditional AI systems that might only analyze or classify data, generative AI is able to produce completely original outputs that even mimic human creativity. It can be used for creating artwork or composing songs, for example. A demand planner can use generative AI to improve predictions, generate new insights, and automate decision-making.
Internet of Things
The Internet of Things (IoT) refers to a network of interconnected devices, sensors, and objects that communicate over the internet. Examples of this include sensors embedded in products, sales and inventory tracking systems, and devices embedded in shipping containers to provide real-time tracking information.
Inventory Flow
Inventory flow is the process by which products travel through a company. It begins with the supplier and ends with consumer purchases. Demand planners use inventory flow to help in managing inventory.
Inventory Management
Inventory management is the process of overseeing and controlling the flow of goods within a business. Proper inventory management ensures that a company has the right amount of inventory at all times to meet customer demand. Demand planning and inventory management are closely intertwined: demand planners work to optimize inventory levels, and forecast inventory demand.
Inventory Positioning
Inventory positioning refers to the strategic placement of inventory within the supply chain. For example, is a particular piece of inventory located within a warehouse, distribution center, or retail location? The goal of inventory positioning is to optimize stock levels, reduce lead times, and minimize storage and transportation costs.
Inventory Visibility
Inventory visibility refers to the ability to track and monitor the status of your inventory in real time through the supply chain. It includes having up-to-date information about inventory levels, locations, and movements, from suppliers and warehouses to customers.
Lead Time
In the context of demand planning, lead time typically refers to the total amount of time between when an order is placed and when the product is delivered. Alternatively, it can refer to when the manufacturing process starts and when the product is ready for delivery.
Machine Learning
Machine learning (ML) is a branch of artificial intelligence that enables systems to learn from data and improve over time, without being specifically programmed. The core concept is that machines can “learn” from historical data, identify trends, and use those insights to make better predictions or decisions.
Market Share
Market share refers to the part of the market that a particular product or company has control over.
On-Premise Software
This is software that is installed and runs on a company’s hardware or servers, within its physical locations (“on-premises”). It is an alternative to software that’s hosted on remote servers or in the cloud. This software is typically managed by an organization’s internal IT team, which gives the company full control over the system.
Outliers
In terms of forecasting, outliers typically refer to data points that fall outside of the norm or the expected pattern. Positive outliers are demand values that are significantly higher than expected and might occur due to a sudden spike in customer interest. Negative outliers are when demand values are much lower than expected, and often indicate a sharp drop in sales or orders.
Platform Agnostic
This term refers to a platform that is free from any ties to a specific system. This means users can access it from anywhere at any time.
Point of Sale Data
This is consumer data that is obtained once a purchase or transaction has been made. Information collected includes consumer information, payment methods, and products bought. An order history can be started for consumers who make multiple purchases. Demand planners can then use this information to help forecast which products are most likely to be purchased in the future and in what quantity.
Predictive Analytics
Predictive analytics is a branch of data analytics that uses statistical algorithms, machine learning, and historical data to make predictions about future events or trends. The goal of predictive analytics is to identify patterns and relationships in data that can be used by demand planners to forecast potential outcomes and guide decision-making.
Product Line
This is a group of products that are sold by the same company. These products are related to each other in some way and are marketed under the same brand.
Product Portfolio Management
This is the crucial process of managing the product lifecycle. The process starts when a product is first introduced and carries through to when a product is discontinued.
Replenishment Cycle
The replenishment cycle is the process and timeline in which inventory is restocked. Demand planning requires implementing an efficient replenishment cycle to ensure that inventory is restocked at the right time and in the right quantities.
Risk Assessment
Risk assessment is the process of gathering information to identify potential factors that may hurt demand for your company’s products. This is useful information for demand planners when deciding how much inventory to order.
SIOP
SIOP stands for sales, inventory, and ops planning. It’s an integrated process that helps organizations align their approach between sales, inventory, and operations. The primary goal is to create a unified plan that aligns business functions, optimizes resources, and improves forecast accuracy.
Sales Forecast
Similar to other forecasts, a sales forecast is an estimation of future sales revenue based on historical data, market analysis, and other relevant factors.
Statistical Algorithms
Statistical algorithms are models that are meant to provide companies with mathematical answers to their questions. Algorithms are used in a multitude of business operation scenarios including marketing, sales, and demand planning.
Supply Chain
The supply chain is an intricate network of information, companies, resources, people, and processes. All of these components work together to produce products and bring these products to consumers.
Trade Promotion
Trade promotion is a marketing strategy that uses special displays, pricing, demonstrations, and small gifts to generate an increase in demand for a particular product. Companies typically rotate which products that trade promotions are offered.
StockIQ: Your Partner in Intelligent Demand Planning
An effective supply chain is impossible without intelligent demand planning. For demand planners to manage inventory, improve forecasting, and simplify ordering, they can turn to StockIQ.
StockIQ is intelligent, user-friendly supply chain management software that’s built for demand planners. Find out how StockIQ can boost operational efficiency, improve forecast accuracy, and simplify strategic planning. Contact us today or request a StockIQ demo.
