Successful, competitive supply chain businesses today rely mainly on one thing for their excellence – accurate, advanced demand planning. You can have a strong business model, desirable products, and an all-star team, but without the right demand planning systems and processes in place, you risk falling behind due to excess inventory and missed sales.
So, which tools for demand planning should you be using in your business? In the multi-billion dollar demand planning solutions market, there are two main types of tools to choose from: built-in tools, which come with your ERP or supply chain platform, or bolt-on solutions, which are add-ons designed specifically for demand planning.
Each option offers clear advantages and distinct trade-offs. This article breaks down the pros and cons of both approaches and offers guidance to help you choose the right fit for your organization’s needs.
What Are Built-In Demand Planning Tools?
Built-in demand planning tools are forecasting and planning technologies that are directly embedded within your current supply chain software, such as your enterprise resource planning or warehouse management system. These tools for demand planning are typically developed by the same vendor that provides the core system (such as SAP, Oracle, or Microsoft), and are designed to work seamlessly with that ecosystem.
Key Benefits of Built-In Tools
- Seamless integration with existing systems: Built-in tools natively connect with your core data sources.
- Lower upfront costs, faster deployment: Since these tools are part of the system you already use, there’s no need to purchase, implement, or manage a separate solution.
- Consistent user experience: Employees already familiar with your current interface will likely find the tools intuitive to use.
Limitations to Consider
- Limited forecasting abilities: Many built-in tools offer basic forecasting solutions and models, but may lack advanced features, like AI-powered analytics or scenario modeling. Studies show that when AI-driven forecasting is applied to supply chain management, errors are reduced by up to 50%.
- Less flexibility and customization: Because they’re designed for broad application, built-in tools may not cater to a business’ unique, specific needs.
- Slower innovation: Built-in tools are part of a larger system, which means new forecasting features or enhancements may take longer to roll out.
What Are Bolt-On Demand Planning Tools?
Bolt-on demand planning tools are standalone software solutions designed specifically to enhance forecasting, planning, and analytics capabilities. Unlike built-in tools for demand planning, these solutions are developed independently of your current platforms and integrate with your existing systems.
Key Benefits of Bolt-On Tools
- Advanced forecasting and AI capabilities: Bolt-on tools often come equipped with sophisticated algorithms, demand sensing, predictive analytics, and even prescriptive recommendations – typically far beyond what built-in tools offer.
- Greater flexibility and customization: These platforms are built to address a range of planning scenarios, industry-specific requirements, and user-specific needs. You can tailor forecasts, dashboards, and workflows to meet your needs.
- Faster updates: Dedicated vendors in this space typically release updates and new features more frequently, keeping pace with technology trends and evolving business requirements.
Limitations to Consider
- Integration and compatibility: Connecting bolt-on tools to your ERP or other data sources can require IT involvement or third-party partners.
- Additional costs: While powerful, these tools often come with an additional price tag, for both upfront and ongoing costs.
- Change management: Because these tools introduce new interfaces and technologies, user adoption may require a structured rollout and ongoing support.
Breaking It Down: Comparison Criteria to Keep in Mind
When deciding between built-in or bolt-on tools for demand planning, it’s important to move beyond surface-level features, and evaluate how each option aligns with your needs, goals, and growth plans.
Here are the key criteria to consider when comparing the two:
Forecast accuracy, intelligence, and sophistication
- Built-In Tools: Typically offer basic statistical models and features, but might not offer high levels of customization or sophisticated features (like AI or machine learning).
- Bolt-On Tools: Often leverage advanced forecasting algorithms, technologies, and practices (like demand sensing, external signal analysis, and scenario planning). These tools can improve forecast precision in dynamic environments.
Integration and data flow
- Built-In Tools: Offer seamless integration with your existing software. Data flows typically require minimal setup, since the data comes from your current systems.
- Bolt-On Tools: Requires additional integration and connection to data sources.
Scalability and flexibility
- Built-In Tools: Best suited for companies with straightforward planning needs. Often provide simple forecasts, with limited options to customize.
- Bolt-On Tools: Built to scale with your organization, both in terms of user volume and planning complexity.
User experience/adoption
- Built-In Tools: Due to their familiar interfaces, adoption can be speedy – users already trained on the main platform can start demand planning with minimal additional learning.
- Bolt-On Tools: May have a steeper learning curve at first, but often come with modern, user-friendly dashboards, visualization tools, and workflow customization. Adoption may require structured onboarding and role-specific training.
How to Choose the RIght Fit for Your Business
Selecting between built-in and bolt-on tools for demand planning is a strategic decision that should reflect your company’s goals, complexity, and growth visions. Here’s a framework you can use to make the right choice for your business:
1. Assess your current processes & data landscape
Start by evaluating your current demand planning process and data landscape. Do you have a formalized planning workflow in place? Is your data clean, accessible, and centralized?
If your team is early on in its planning maturity, a built-in tool may offer just enough structure without adding too much complexity. On the other hand, more mature organizations may need the flexibility and depth of a bolt-on platform.
2. Map tools to your business’s complexity
Consider the scale and complexity of your operations. Do you manage hundreds of SKUs or thousands? Are you operating across regions or supply networks?
If your business operates with relative simplicity, built-in tools can cover the essentials. But for businesses with multiple product lines, dynamic markets, or a global footprint, bolt-on tools might offer you the necessary degree of performance and configurability.
3. Align with internal capabilities
Successful adoption hinges on your team’s abilities. Consider questions like:
- Does your IT team have the bandwidth to support integrations?
- Do planners have the technical skillsets to operate advanced platforms?
- Can you dedicate time and resources to training and change management?
Bolt-on tools often require a bigger initial lift (like during setup and onboarding). If your team isn’t ready for that, a built-in tool might deliver value more quickly.
4. Consider a long-term strategy
Think beyond your needs today, and consider what the future of your business might look like. Are you planning for rapid growth or significant expansions? Will you need more advanced planning capabilities in the next 12-24 months?
If you expect operations to grow in complexity, a bolt-on tool may be a better long-term investment. On the other hand, if your focus is on streamlining processes and maintaining operational stability, a built-in solution could be what you’re looking for.
Ultimately, choosing the right tools for demand planning requires you to consider what’s best for your business, both now and in the future.
Upgrade Your Demand Planning Capabilities with StockIQ
Built-in or bolt-on? The answer isn’t one-size-fits-all. What we can tell you is that if you’re ready to level up your demand planning capabilities, StockIQ is here to help.
StockIQ is a supply chain planning suite that taps into advanced technologies (like AI and ML) to help you improve demand forecasts (and how you use them). Our user-friendly system enables you to control inventory, simplify ordering, and enhance forecasting.
Are you interested in learning how StockIQ can help you leverage the power of highly intelligent demand forecasts? Contact us today or request a StockIQ demo.
