The oil and gas industry is one which is extremely volatile. Factors like fluctuating oil prices, regulatory changes, and new technologies all have the potential to reshape this industry in a short period of time. These external forces also make it necessary for businesses to focus on increasing productivity, decreasing costs, and increasing operational efficiency. Demand planning automation is a supply chain software feature which can help businesses respond faster to changing market demand. Here, we will explain what demand planning is, why it’s important for the oil and gas industry specifically, and how demand planning automation can help your business achieve its goals.
What is Demand Planning?
Demand planning is a method which businesses can use to forecast demand for their products. Demand planning allows organizations to identify periods of both over- and underutilization of resources. When done well, demand planning can be an extremely useful tool for minimizing excess inventory and increasing customer service levels. Demand planning can be done manually or with the assistance of a demand planning software solution. Demand planning is done by collecting information from customers, salespeople, and other stakeholders to forecast customer demand. Without automation, this is a complex and time-consuming task prone to human error.
Why is Demand Planning Automation Important for the Oil and Gas Industry?
Oil and gas businesses face a unique set of challenges which makes demand planning automation especially important for their supply chain. Some of these challenges include:
- Extreme market volatility: The oil and gas industry is one which is extremely volatile. Factors like fluctuating oil prices, regulatory changes, and new technologies all have the potential to reshape this industry in a very short period.
- Lack of predictability: Due to the volatility of the market, oil and gas businesses have trouble predicting future sales. As a result, demand planning becomes even more important.
- Slow and deliberate procurement process: Oil and gas businesses have a slow and deliberate procurement process to ensure that procurement decisions are well-informed. This process can make it difficult for businesses to react to changing market conditions.
- Large and complex supply chains: Oil and gas businesses have large and complex supply chains, and a high reliance on external suppliers. This makes it difficult to forecast customer demand accurately.
3 benefits of Demand Planning Automation in Oil and Gas Supply Chains
- Accuracy – The best reason to implement demand planning automation is that it can help businesses forecast demand more accurately. This can result in lower inventory levels and higher customer satisfaction.
- Speed – Another benefit of demand planning automation is that it allows businesses to forecast trends more quickly. As such, it will help oil and gas companies respond more swiftly to changes in market conditions.
- Efficiency – Finally, demand planning automation can help businesses make better use of their resources, such as inventory and staff. This can result in cost savings and a higher return on investment.
How to achieve Demand Planning Automation
Build a strong data foundation – The best way to get started with demand planning automation is to build a strong data foundation. This means improving data quality, collecting data from as many sources as possible, and finding ways to integrate this data with other applications where possible. Use demand planning software – Once you have a strong data foundation, you can begin to use demand planning software to forecast demand. There are several excellent demand planning software solutions on the market, and G7 Tech Services has the skill and knowledge set to help you choose and implement an effective demand planning automation strategy.
The oil and gas industry is one which is extremely volatile, making demand planning automation a necessity. This is because accurate forecasting of customer demand is essential for minimizing excess inventory and increasing customer service levels. During periods of extreme market volatility, oil and gas companies also struggle with lack of predictability regarding demand, making demand planning even more important. While it may be difficult to forecast demand accurately without automation, there are ways to make the process easier.