What is demand forecasting?
Demand forecasting methods predict future customer demand over both the short and long-term, as well as the corresponding labor required to serve those customers. A demand forecasting algorithm uses historical sales data and other markers to predict that future demand.
What value does demand forecasting provide for businesses?
Demand forecasting can provide valuable information about the market and your place in it. This can help your managers make important decisions about pricing and business growth strategies.
Anticipating demand allows businesses to know when to increase resources and staff to keep operations running smoothly. By assisting with goal-setting, budgeting and planning, active demand forecasting models provide the kind of valuable data that companies need to make accurate decisions on everything from procurement and inventory management to supply chain structure and customer satisfaction.
What if I don’t make efforts to predict future customer demand?
Without proper forecasts, your scheduling will likely be inaccurate, negatively impacting shift coverage and customer service. The more accurate your demand forecast, the better the decisions your management teams can make. By using the right techniques you can make educated predictions and arrive at more profitable decisions.
Besides historical data, what else does demand forecasting use to make predictions?
Your demand forecast’s main drivers will vary depending on your industry. For example, retailers use historical data like customer and sales forecasts. A manufacturer, on the other hand, will likely use factors such as the number of production lines in operation or the day’s production volume targets.
A demand forecast, once in place, will define and track a number of different metrics, including:
- Product lead time
- Sales periods
- Stock levels
- Purchase costs
How can Axsium help your business?
The most powerful demand forecasting methodologies need continuous input and updating. For most businesses in today’s rapidly evolving marketplace, manually inputting and interpreting data is simply not practical.
Axsium helps organizations implement and use technologies that allow your demand forecasting to occur in real time. Our demand forecasting experts have years of experience helping companies build agile and flexible forecasting practices that make their businesses more efficient. Contact us to find out more.