NetSuite continues to flesh out its Cloud ERP ambitions with a move into the integrated demand planning space, an area of the market that has proved tricky and elusive for traditional ERP providers.
This could be highly lucrative for the firm. According to Gartner's Business Case for Demand Planning report earlier this year, as few as one in five companies has adopted a demand planning solution. This lack of an integrated solution leaves many organisations struggling with disconnected ERP, inflexible tools, and out of date spreadsheets to manage demand and denies them the benefit of being able to use real-time data to allign sales forecasts with inventory replenishment plans.
NetSuite reckons its new demand planning bridges the gap between the front office and back office systems and enables firms to:
- Improve inventory forecast accuracy by automatically building inventory forecasts from real time data, businesses can reduce demand planning cycle time, lower risk of error, and operationalise the demand planning process.
- Reduce excess inventory or risk of stock outs by ensuring the right amount of inventory is kept on hand to effectively meet demand rather than having to tie up unnecessary capital in inventory
- Minimize manual restock processes by automating the actual inventory replenishment plan and creating the necessary purchase orders and work orders to meet anticipated demand
Among the early adopters cited for the new offering is Valutek, a manufacturer of latex gloves and other cleanroom-friendly products.
The company’s VP of Finance, Kirk Mathers said:
There are also customer satisfaction implications. By using sales forecasts to build an inventory plan and augment the plan with special predictions, such as marketing input on new product launches, inventory plans can be built using statistical forecasting models such as linear regression, moving averages and seasonal averages, based on historical sales data. These projections can be automatically delivered to upstream providers, ensuring that the entire flow from raw materials to end customer is managed with minimal disruption, resulting in happier customers.
Respected Wall Street market watcher Oppenheimer told clients that this was a good move by NetSuite:
For its part, NetSuite reckons that the new module is a competitive differentiator in a market where new pushes from Microsoft and SAP are changing the competitive landscape. Jim McGeever, NetSuite COO, argues:
