Benefits of Demand Forecasting
If there was a way to predict future trends and grow your company’s success, would you be interested? Well, we have some good news for you! Demand forecasting will give you a much clearer window into the future demand of your products or services, and it’s a sure way to be more successful in your business endeavors.
Demand forecasting is the process of using data analysis to predict future consumer demand and trends. The created forecasts are then used to make informed decisions related to supply chain operations. Demand forecasting software is used by business managers and companies everywhere. Choosing to implement demand forecasting tools into your operations, will benefit your company in a number of ways.
There are many benefits that come from demand forecasting, and we’ve separated them into the following categories: inventory, financial, and operational benefits. Let’s take a look at how these different areas can be strengthened with demand forecasting software.
No matter what it is that your company offers, the product or service you provide is at the heart of all you do. Implementing demand forecasting software will allow you to have a more realistic and reliable knowledge of what your inventory should look like.
It’s never fun to have empty shelves. Empty shelves mean you’re losing business. Not only are you missing out on sales, but your customers are going to find a different and more reliable source to get what they want. If you put inventory forecasting software to the test, you’ll know the items your consumers want. This will allow you to keep an appropriate level of inventory. Your customers will be able to get what they want, without your shelves being too empty or top full.
Recently, there has been a shortage of some electronic chips. Nissan in particular has experienced the effects of the shortage. They have stopped offering some of the high-end and special features in some of their vehicles currently in production. Nissan has made some adjustments to what they offer, which isn’t really the desired situation. Ideally, the best features would be offered in all new cars, but there just isn’t enough inventory to do so, and production time of the chips has been fluctuating due to the Corona virus. Demand forecasting in supply chain operations is one solution to this very real problem.
Having a better idea of what your inventory levels need to be will save you money. You won’t spend too much money on unpopular and unsuccessful products. Having less inventory also requires less labor, so you’ll be able to save money in that area too. In the case of Nissan, they would have been able to make more money on the features that need the chip, but they unfortunately lacked the inventory to do so.
If there’s a way to save money, don’t you want to do it? Demand planning and forecasting will definitely improve your finances.
Have you ever thrown a party or hosted a meal? Typically hosts want their guests to RSVP. Why do you think that is? The number of guests affects the amount of food that will be served at the event. It would be pretty awkward if there was only enough food for most of the people. Imagine everyone sitting round the table eating, except for the host because they gave their food to a guest who didn’t RSVP. Sounds pretty uncomfortable to me. In the same train of thought, it would be a bummer to have way too much food and not enough guests. This can be compared to budgeting in your business.
If you have a better idea of what consumer demand is going to be, you can budget much more effectively. You’ll have a reliable forecast you can use to plan, just like an RSVP call. Budgeting for your company is done on a larger scale than planning a group dinner. That makes it even more important to have a good idea of what your future demand will be, so you can use your financial resources appropriately and productively.
Aside from budgeting, there are other decisions to be made in your operations regarding money. If you have a confident view of the future, you’ll start to confidently make effective plans, resulting in improved finances.
The benefits above could technically fall into this category as well. However, there are some additional opportunities for improvements that can occur in your company.
Relating back to improvements in your product inventory, your supplier relations will be even better than they might currently be. If you start to have a more accurate idea of what products you will need from your supplier, your communication will be better. There’ll be less room for confusion and conflict. You and your supplier will have the chance to be more reliable to one another.
One of the main reasons demand forecasting is implemented is to improve customer satisfaction. Reliable forecasts allow businesses to keep the inventory their customers will want. These businesses positively stand out against the companies that experience stock outs. Due to the confidence they gain in your business, consumers will become more loyal and happier
Aren’t all of these benefits awesome? We think so too. Demand management software is an extremely useful tool that will positively impact your business. Your inventory, finances, operations, and more will all be improved and strengthened in different ways. If you want to know how demand planning tools can be specifically catered to the needs of your company, you’re at the right place.
Our team members would love to help you see how Avercast’s industry-leading software can be implemented in your day-to-day operations. Regardless of the type and size of your business, we have a helpful solution for you. Our software uses over 200 algorithms to create the most accurate forecasts possible. Demand planning and forecasting are what you need to be successful in today’s market. To learn more, contact us at www.Avercast.com today.