Demand forecasting is a resource used to analyze and forecast your company’s inventory. With it, you will not be caught by surprise with leftovers and shortages of goods. The logic of the tool consists of the diagnosis made from the history of the business, in addition to the weighing in from the freight experts.
By applying demand forecasting, you will understand market needs in an agile and strategic way. Therefore, the locations, periods, and amount of demand for each product in the future will be discovered. Anticipating this efficiently, with agility, is a huge competitive advantage.
In this sense, depending on the company, the calculation of the demand forecast can be carried out based on sales figures, seasonality, and marketing actions. In other, more complex situations, the study will involve all sectors of the organization. It’s not possible to ascertain definitively how the process standardizes itself as it’s not standardized.
What happens in all companies, however, is the combination of quantitative and qualitative analysis. We are not talking about intuition. The subject involves accurate information that will help you manage your inventory intelligently or even correct a problem that has been disturbing your sleep.
Our TruKKer freight platform is powered by our proprietary AI-powered algorithms that auto-detect signals from the daily demand-supply equation. That’s why each load we assign, and transport we deploy are always the best of both worlds. Firstly, the prescribed rate doesn’t change – all thanks to our instant pricing system, an industry-first in MENA. Secondly, whatever demand it is, our network can always stand up to it because it’s all preempted and figured out. Our clients neither have to dabble in any guesswork nor confront rollovers due to capacity crunch.
How does demand forecasting help inventory management?
There are numerous benefits made possible to companies through demand forecasting. The main ones, which unfold into others, are cost reduction and data-based decision-making. We will explain each of them below.
Decrease in costs
First, the estimates provided by the demand forecast make cost control more precise. This is because investments with unnecessary inputs and waste are avoided. The stock starts to be controlled so that the same products are not made already stored until they are sold. Working with budget planning has a lot of impact on the financial health of the business.
Imagine a company in which managers effectively have the macro knowledge of the progress of the business — which, of course, involves production numbers. The demand forecast delivers all the important information in this regard. It is necessary to keep the stock with a certain number of items, without excess and shortage, to enable the production flow without bottlenecks. If this happens, pricing is adjusted, and tasks optimized.
More than just making productive decisions, managers can better align marketing campaigns, defining the focus product of the cycle. Manpower, overheads, contracts with suppliers, and service providers, with demand forecasts, are observed from a completely strategic perspective.
As you’ve seen throughout the article, the supply chain foundation has a strong link to demand forecasting. The implementation of the feature, as you might expect, takes place with the acquisition of specialized management software, ready to receive your business information and issue personalized reports. However, we recommend that, before investing, you reflect on what growth possibilities will be generated by technology.
- Set goals (what you want to know and why)
- Establish the time (how and when the data will be monitored)
- Choose the data (what information will be monitored and by whom)
- Schedule a routine of analysis and planning (the results are moving towards the achievement of the objective)