What to Know About Demand Forecasting
This article will cover common questions regarding demand forecasting in supply chain. It’s important for businesses to understand the benefits that come from demand planning and forecasts. Read this article to learn how you can improve your company practices with just a few clicks of a button.
Today’s market conditions are comparable to large open spaces of the ocean where wind causes large waves. Like this wind, the constant change in consumer demand affects the market everywhere.
As a company who offers a product or service to consumers, you might ask yourself questions like the following at some point.
Is there a way to productively manage demand? What is forecasting software? What’s the best demand forecasting software for my needs? Lucky for you, we have the answers! When understood and implemented correctly, demand forecasting can positively affect the operations of a company in countless ways.
Keep reading to learn all you need to know about demand forecasting. If you have any more questions after reading this article, please don’t hesitate to reach out to us.
What is Demand Forecasting?
A forecast is a prediction of a future trend or event, so demand forecasting is the prediction of future demand. Using data such as past sales, consumer profiles, current trends, and more, forecasts are produced. This happens using forecasting software.
Forecasting software is a highly effective and useful tool that allows users to have a more reliable vision of the future, rather than just relying on personal predictions. There are endless moving parts when it comes to running a business, so why not invest in a tool that is sure to help? Business forecasting software allows companies to prepare for whatever lies ahead.
Have you even noticed more empty shelves than normal? In the past year especially, inventory inaccuracies have become more and more common. Knowing what consumers are going to want allows you to prepare your inventory to meet that demand.
Gone will be the days of overstock and stockout situations. When your customers recognize you as a reliable source for their goods, you’ll have increased customers loyalty which brings more benefits!
When you’re given knowledge of what you need to do to prepare, your warehouse operations can also improve. Without unnecessary inventory crowding the shelves, shipments can be correct and timely. This will also result in happier employees.
As inventory operations improve, you’ll notice many other areas that can be improved. You can better plan your marketing efforts, save money, make money, and much more!
Do you Need it?
If you’re a mid-large size business that offers a product or service to consumers, yes! You will experience the above advantages and more, with demand management software.
There are many examples of successful companies who use these tools.
Let’s think about Costco, for example. Costco sells a lot of products, but not many similar options. For example, Costco sells chewy chocolate chip granola bars. If you were to go to Walmart, they’d have a bunch of different flavors of similar chewy granola bars.
However, Costco just sticks to their simple chocolate chip option. Costco sells products that have proven to be highly rated by consumers. Customer loyalty at Costco is unmatched, as consumers repeatedly purchase the same products.
This isn’t a strategy that would work for every store, but it really works for Costco. This tactic is made possible partly through forecasting. Costco can forecast what their consumers are going to want, and then make sure they have enough boxes of chewy granola bars to meet that demand.
Demand forecasting in the supply chain greatly improves the operations of companies that choose to use it. The goal of most companies is to make profit, and forecasting can really help with that! If you think your company could use this effective tool, it’s important to continue to research and find the best fit for your specific needs.