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AI-driven demand planning for Retail and Distribution

AI-driven demand planning is changing retail and distribution, replacing static forecasts with real-time insights for smarter, faster, and more agile supply chain decisions.

In today's fast-paced retail environment, effective inventory management is crucial for maintaining profitability and customer satisfaction. The UK retail and distribution landscape is shifting rapidly. With rising consumer expectations, global supply chain disruption, and increased pressure to manage inventory and costs, the need for smarter demand planning and advanced planning and scheduling has never been more urgent.

In this blog, we explore why AI-powered planning enabled by platforms like Microsoft Dynamics 365 and Demand-Driven Material Requirements Planning (DDMRP) is quickly becoming the new standard for retailers and distributors who want to lead, not lag. 

Planning with DDMRP

Supercharging Planning with DDMRP

When paired with Demand-Driven MRP (DDMRP), Dynamics 365 becomes even more powerful. DDMRP focuses on actual demand signals, not inaccurate forecasts. It places dynamic inventory buffers in key supply positions and triggers replenishment based on real-time consumption. By integrating DDMRP into Dynamics 365, companies move from guessing to knowing and from reacting to leading. For retailers and distributors, this means:

  • 30–45%

    Inventory reduction

  • Up to 99%

    Service levels

  • 80%

    shorter lead times

  • 70%

    less planner effort and more resilient, responsive supply chains.

The Planning Crisis in Retail and Distribution

Today's retailers face a complex mix of challenges that traditional planning systems were never designed to solve:

  • Unpredictable demand driven by promotions, online trends, and economic shifts.
  • Global supply chain delays, longer lead times, and sourcing risk.
  • Omnichannel complexity across eCommerce, stores, and 3PLs.
  • High inventory costs due to static replenishment logic.
  • Siloed data makes it difficult to respond in real-time.

These issues result in poor service levels, lost sales, overstocking, and burnt-out planners.

The Shift to AI-Driven, Demand-Led Planning 

The modern approach to planning is dynamic, data-led, and customer-centric. By harnessing the power of AI, retailers can move beyond relying solely on historical forecasts and instead predict, sense, and respond to actual demand in real time.

This evolution is fundamentally reshaping supply chain operations. Static forecasts are giving way to real-time demand sensing, while manual spreadsheets are being replaced by automated planning workflows. Traditional forecast-driven MRP is evolving into Demand-Driven MRP (DDMRP), enabling more responsive and agile inventory management.

Instead of constantly reacting to stockouts, retailers can now proactively balance inventory across the network. And rather than relying on gut-feel decisions, businesses are empowered to take AI-supported actions rooted in real-time data and predictive insights.

What is DDMRP, and how does it compare to MRP?

In this 10-minute expert view interview, Matt Birtwistle chats with Chandru Shankar, VP Supply Chain Solutions at HSO Partner company B2Wise, about the benefits of using Demand Driven Material Requirements Planning (DDMRP) within Dynamics 365. B2Wise is a global leader in the Demand Driven MRP (DDMRP) method, providing innovative software and comprehensive training to help businesses transform their supply chain management.

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Why Microsoft Dynamics 365 is a Game-Changer 

At the core of this shift is Microsoft Dynamics 365, a key component of the Microsoft Cloud for Retail. With its advanced Cognitive Planning and Execution capabilities, Dynamics 365 empowers retail and distribution businesses to operate with greater agility and intelligence.

It leverages AI-powered forecasting models that adapt to seasonality and shifting trends, while providing real-time inventory visibility across channels and warehouses.

Businesses can run "what-if" simulations to prepare for supplier delays or sudden demand spikes, automate replenishment to ease the burden on planners, and connect data across finance, sales, operations, and logistics for faster, more informed decision-making. In essence, Dynamics 365 replaces reactive spreadsheets with a proactive, intelligent planning system that delivers measurable value.

Real-World Impact: HSO Customer Stories

At HSO, we’ve helped leading retailers and distributors across the UK adopt Dynamics 365 and DDMRP to transform planning performance: 

  • Large UK Retailer: Reduced DC inventory by 25%, increased store availability during seasonal demand spikes, and automated replenishment from the central warehouse to 300+ stores.
  • B2B Distributor: Cut planning cycle from 3 days to 4 hours, improved planner productivity by 70%, and reduced urgent orders and last-minute shipments.
  • Online Fashion Brand: Synced promotions with fulfilment plans, achieved 99.5% on-time delivery during Black Friday, and reduced stockouts and customer returns. 

Summary: Smarter Planning Starts Now 

The future of retail and distribution belongs to those who can plan smarter, respond faster, and serve customers better. With Microsoft Dynamics 365 and DDMRP, your business can: 

  • Replace static forecasts with real-time, AI-powered insights 
  • Automate and optimise planning across your supply chain 
  • Reduce inventory costs while improving availability 
  • Build a resilient, demand-driven operation that scales 

Ready to Reinvent Your Planning Process? 

Let HSO show you how AI-powered planning can transform your business, starting today. Book a demo and talk to our experts. 

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