How do you plan for demand when every order is custom? In this episode of Supply Chain Chats, Lisa Anderson sits down with Diane Garcia, LMA Senior Associate, to break down Demand Planning for Custom Manufacturing. They tackle the complexities of lead times, improving sales forecasting, using quotes effectively, and how a structured process like SIOP (Sales, Inventory, and Operations Planning) can drive profitable growth. If you struggle with unpredictable demand, this chat is a must-watch!
Engineer-to-order (ETO) and configure-to-order (CTO) manufacturers face unique challenges due to long lead times, complex engineering requirements, lack of clarity of the bill of material (BOM) until it is fully engineered, and variability in customer demands. Without a robust custom product forecasting and planning process, supply chains become reactive, leading to expedites, delays, inefficiencies, and excess inventory.
Lisa and Diane highlight key strategies for overcoming these challenges, including:
✔ Identifying commonalities in custom orders
✔ Developing product configuration strings for product groupings
✔ Leveraging ERP capabilities and SIOP processes for better supply chain visibility
✔ Using data from ERP, CRM, or even Excel to improve planning accuracy
✔ Incorporating quotes and early-order indicators to anticipate demand
By improving revenue forecasting and its translation into product forecasts, manufacturers can increase production output as they have more time to optimize and prepare, reduce customer lead times, optimize inventory (on average 25-50%), and drive profitable growth—all without investing in expensive new systems. The key lies in leveraging available data, streamlining processes, and making strategic supply chain decisions.
Don’t miss this conversation on demand planning for custom manufacturers and how a structured approach can transform your supply chain success!
If you are interested in reading more on this topic:
Achieving Results with LMA Consulting: Avtron Power Solutions’ Journey