Demand planning is essential for businesses that want to closely match the supply of items in their warehouses to the demand for those items. With a good demand planning system in place, excess inventory can be kept to a minimum without the risk of running out of items. Let’s take a look at how NetSuite demand planning works. 

Setting Up NetSuite Demand Planning

As with most NetSuite functionality, setting up demand planning in NetSuite requires enabling some features and setting some preferences. In Enable Features, you can find the Demand Planning feature under the Inventory section of the Items and Inventory tab. And if you use assembly items, then you will also need to enable the Work Orders feature in order to use demand planning with any of your assembly items.  

There are a handful of preferences that you may want to consider as well. One of the more important preferences is located on the Inventory Management Preferences page, which you can access by navigating to Setup > Accounting > Inventory Management Preferences. On this page, choose either Orders or Actual Sales under Transactions to Consider. Your selection here determines which transaction types will be included in the demand planning calculations. 

The Calculate Item Demand Plans Record

Now let’s dive in to the demand planning record itself. This is where you define a demand plan. Navigate to Transactions > Demand Planning > Calculate Item Demand Plan. At the top of the page, there are a couple filters that you can set to restrict your plan. These include the specific subsidiary that you want to associate with this demand plan and the location for the items. Only items in your selected location will appear in the demand plan. 

You will also need to determine the projection method for this plan. There are four possible projection methods, and each one differs slightly from the others. The Linear Regression method looks back at historical data and uses it to predict future demand. The Moving Average method also pulls its data from past demand, with the only difference being that it uses an average the historical data in its calculations. The Seasonal Average method breaks down the data by months and uses that to predict demand in future months. The Sales Forecast method abandons the historical data approach, using current sales opportunities instead to forecast upcoming demand. The projection method you choose may have slight impacts on the rest of the fields at the top of the demand plan record.

After you’ve chosen a projection method, there are some other fields you need to choose values for. First, you need to choose the projection interval. The Seasonal Average projection method requires that you use a monthly projection interval, but the other methods allow you to choose either a weekly or monthly interval. The projection start date field will default to the beginning of the current week (if you chose a weekly interval) or the beginning of the current month (if you chose a monthly interval). 

For the demand plan, you can decide how far into the future you want to see the plan. In the projection duration field, enter the number of periods (for either months or weeks, depending on your selected interval) that you want to see data for. And for the projection methods that calculate the demand plan using historical data, you can set how far back NetSuite will look in the Historical Analysis Duration field. After all these fields have been filled out, you will be able to select the items that you want to calculate the demand plan for and then click Submit.

In the above picture, notice that I have chosen the linear regression method, I want to see monthly intervals for the plan, and I want a demand plan that pulls from the last six months of demand data and projects the next six months. Notice in the list of items that you have the option of selecting an alternate source item for each of your items. If you understand that one of your items will not have accurate or helpful data for NetSuite to pull from, you can select a similar item to use for the demand plan for this item. 

The Item Demand Plan Record

Once you’ve calculated the demand plan for certain items, how do you view the resulting plan? Navigate to Transactions > Demand Planning > Item Demand Plans. On this page, select View next to the item whose demand plan you want to see. You may need to use the filters at the top of the page to more easily find the exact item you need. 

On the Item Demand Plan page, you’ll see the calculation information that you set as well as the actual demand plan listed out. On the demand plan, you can change the year, month, and start or end dates. You can also change the view to daily, weekly, or monthly. 

NetSuite Demand Planning Reports

How do you know if your demand plans are being effective? There are a handful reports that can help you track things like the accuracy of your demand plans and historical demand data. You can access each of these under the Demand Planning section on the Reports page. These reports include Demand History by Item, Item Demand Plan by Item, and Item Demand Forecast vs. Actual. 

Conclusion

Being able to use the NetSuite demand planning features for your items ensures that you can maintain optimum inventory in your warehouses at all times. If you enjoyed this blog, be sure to subscribe to our mailing list below to receive new NetSuite blogs right in your inbox each week!