NetSuite gets into demand planning

NetSuite is offering demand planning capability for inventory and logistics based businesses. It's a smart move.

NetSuite has announced its first serious foray into the demand planning space. From the blurbs:

Designed to enable wholesalers, manufacturers, retailers, and distributors to achieve best-in-class inventory management practices, NetSuite Demand Planning enables companies to forecast peaks and troughs in demand and minimize capital tied up in inventory. Leveraging NetSuite’s integrated business management suite, NetSuite’s new demand planning bridges the gap between the front-office and back-office − allowing companies to tightly align sales forecasts with inventory replenishment plans. This supports businesses with minimizing excess inventory, eliminating stock outs, and improving customer satisfaction.

This is an interesting move at multiple levels:

Medium sized businesses have been poorly served in this area, often having to rely on what often become multiple spreadsheets with the inherent problem of requiring almost constant updating and rechecking. This is how NetSuite explains the offering:

Businesses can use sales forecasts to build an inventory plan and even augment the plan with special predictions, such as marketing input on new product launches. Alternatively, inventory plans can even be built using statistical forecasting models such as linear regression, moving averages and seasonal averages, based on historical sales data.

Those forecasts should already exist within NetSuite SFA and can be augmented by information gleaned via marketing reports. Using the alternative method will require some care because in volatile periods, the past is not necessarily a great guide for the future.

Providing a solid business case is not difficult in recessionary times and NetSuite should be congratulated on this first outing. The demand planning module allows for collaboration with business partners which NetSuite says is increasingly becoming the norm. It is that collaboration in planning that helps companies smooth out demand lumps and bumps. No mention is made of whether this would (or could) include Yammer, which is already in process of being integrated. If true, then it is a major communications step forward for these styles of business.

Quite how those use cases will be licensed is unclear though NetSuite did say that this will be offered as a separate priced module. If NetSuite follows its usual pattern then expect to pay a module price of $299/month with $99/user/month.

While this solution is aimed primarily at companies running inventories and logistical operations, the next obvious step is to up the functionality to include for constraints in manufacturing. That's a tougher development challenge but I am betting a broader set of customers will find that more appealing.