AI Capabilities to Drive Demand Planning Market to $8 Billion by 2025

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Global revenue from demand planning applications will generate over $8 billion by 2025 as artificial intelligence (AI) capabilities offered by vendors continue to improve and appetites for data-driven supply chain transformation reach critical mass. The growing e-commerce sector and the need for such solutions in the Asian market are also responsible for this forecasted growth. This is according to ABI Research, a market-foresight advisory firm providing strategic guidance on the most compelling transformative technologies.  

With the volume and variety of valuable data proliferating inside and outside the enterprise, AI and machine learning are becoming integral to successful supply chain planning. Only with these technologies can companies leverage demand sensing, which uncovers the hidden relationships between hundreds of demand drivers and their effect on actual product sales. As AI and machine learning models become increasingly sophisticated and enterprises get better at collecting complex data, demand sensing capabilities, and therefore supply chain efficiency, will improve further.

“It is becoming vital for enterprises to understand how product demand is impacted by continual shifts that occur internally in the supply chain and externally in the market,” said Nick Finill, senior analyst at ABI Research. “Companies that can anticipate opportunities or risks and then respond in a dynamic way will gain a major advantage as agility becomes a crucial feature of the modern supply chain.”

The need for more advanced, machine learning-based demand sensing capabilities means that complex data from outside of the enterprise is becoming enormously valuable. Relying exclusively on internal data, such as historical sales figures, is no longer enough in the current climate of global supply chain complexity and unpredictable consumer behavior. Being able to digest and analyze structured and unstructured data from the external market, such as weather data, social media posts, and economic indicators will become a critical need as supply chains transform.

Demand planning software vendors are playing a crucial role in driving innovation and a more demand-driven approach to business planning within the supply chain. Best-of-Breed vendors in this space, such as Anaplan and o9 Solutions are creating compelling products for companies in desperate need for external technical expertise. While companies such as Infor and SAS are incorporating these features into an impressive offering of wider supply chain and analytics solutions.

“Forecasting demand is only half of the equation, however,” said Finill. “Companies must understand how to effectively execute demand-driven planning and involve the entire business in a coordinated, holistic response that maximizes profitability for the wider enterprise. Companies that can make value-based operational decisions driven by reliable demand sensing capabilities will have a major advantage over those that can’t.”

These findings are from ABI Research’s report Demand Planning and Optimization in the Supply Chain application analysis report. This report is part of the company’s Intelligent Supply Chain research service, which includes research, data, and Executive Foresights. Based on extensive primary interviews, Application Analysis reports present in-depth analysis of key market trends and factors for a specific application, which could focus on an individual market or geography.

About ABI Research

ABI Research provides strategic guidance for visionaries needing market foresight on the most compelling transformative technologies, which reshape workforces, identify holes in a market, create new business models and drive new revenue streams. ABI’s own research visionaries take stances early on those technologies, publishing groundbreaking studies often years ahead of other technology advisory firms. ABI analysts deliver their conclusions and recommendations in easily and quickly absorbed formats to ensure proper context. Our analysts strategically guide visionaries to take action now and inspire their business to realize a bigger picture.