Demand planning has a big impact on business performance. Planning error can put revenue at risk by driving component shortages. Persistent planning biases can tie up cash by driving excess inventory. Furthermore, the act of planning and dealing with planning error is time consuming and drives costly overhead. In fact, it is common for supply chain management executives to cite "planning errors" as the greatest obstacle they face to achieving their goals and objectives.

There is a sea change occurring in global supply chains and operations, driven by a series of massive environmental shifts – digitization, the "Internet of Things," geopolitical cost and risk structures and, less noticed by senior executives but every bit as important, a huge increase in the power of customers, whether consumers or businesses. This last factor is driven by social media, ubiquitous connectivity and increased communication, and is resulting in decreased brand loyalty and increased demands and expectations across a wide range of service and experience. To respond to, and be ahead of, these changes, companies need to be agile, resilient and low-cost while simultaneously driving increased customer retention and acquisition. No longer is the question "do we prioritize customer intimacy or operational effectiveness?" Now everyone needs both!

Analyst Insight: Next-day delivery is the new normal. And fulfillment windows are compressing even further as companies like Amazon continue to raise customer expectations. But companies wrestle with what level of service makes sense, and how to justify investments. It's not about making every process in the DC faster. It's a delicate balance of revenue gains and improved customer service against investment and operating costs. - Helgi Thor Leja, Industrial & Electrical Industry Leader, Fortna Inc.

The Defense Logistics Agency tasked partner LMI with helping to develop a more efficient system for managing items with infrequent demands through an innovative system that accounts for need and risk, without sacrificing mission-readiness.

The Defense Logistics Agency tasked partner LMI with helping to develop a more efficient system for managing items with infrequent demands through an innovative system that accounts for need and risk, without sacrificing mission-readiness.

One of the new buzzwords in the demand planning arena is demand sensing. Developed around 2003, demand sensing has slowly been grabbing the interest of the CPG, energy, food, beverage, and chemical industries. Often viewed as an alternative to demand management, demand sensing is anything but. Let's compare the two.

North American supply chains became more complex in 2012 as the economy continued to recover. Rapid innovation, higher seasonal sales and increased reliance on promotions contributed to make forecasting more challenging. These and other findings are contained in the Terra Technology Forecasting Benchmark Study, now in its fourth year.

Surrounded by an explosion of data, most forecasting systems have no way to leverage or take advantage of it.

Demand sensing and planning applications, currently representing 8.5 percent of overall supply chain management spending, and are expected to climb to 8.7 percent by 2015 largely due to demand volatility.