Leverage Demand-Forecasting Data to Gain Advantages
The December cover of Supply & Demand Chain Executive touts “The Rise of Demand-Driven Supply Chains” as the cover story. Demand forecasting has always been a key consideration in supply chain management (SCM), but is it headline-worthy? Using analytics and data to determine potential demand with some level of accuracy for short- and long-term planning can have far-reaching impacts across companies. Being able to precisely predict demand can affect customer satisfaction, inventory costs, and cash flow.
Why is demand forecasting so important?
Many factors can influence demand, including trends, politics, global market fluctuations, weather, and more. Today’s rapidly changing market requires supply chain leaders who can adapt to meet increasing customer expectations. Consumer demand is becoming more erratic and unpredictable, affecting those throughout supply chains, including manufacturers, shippers, carriers, and retailers. Modern-day supply chain complexity and the number of participants can make it nearly impossible to accurately track and understand demand patterns using legacy technologies and methods. And losses due to inaccurate demand planning can be significant: Too much inventory leaves supply chain managers with costly warehousing and overstock issues; too little inventory hinders logistics leaders’ abilities to meet customer demands, leaving them likely to miss out on sales and risk their brand reputations.
The benefits of letting demand drive SCM
Demand-driven supply chains are becoming more popular for leveraging the agility, flexibility, and scalability required for successful SCM now and into the future. In a demand-driven setup, logistics partners have access to real-time data and analytics across the supply chain that can deliver precise information about demand, enabling quick reaction times as well as long-term planning based on concrete data. This approach can offer wide-reaching benefits for improving inventory management, enhancing sales strategies, increasing customer satisfaction rates, guiding transportation planning, and more.
Technology tools to improve demand forecasting
As in other business and SCM aspects, disruptive digital technologies are transforming demand forecasting. Business intelligence solutions provide real-time data from automated IoT technologies that help industry experts decipher internal and external demand factors. This better equips business analysts to realize patterns using actionable data, enabling them to make more precise demand predictions. Next-generation demand-forecasting technologies can generate
- more accurate real-time predictions through transparency and visibility across the supply chain,
- smarter use of and greater access to crucial data points, and
- machine-learning algorithms that transform data deluges into data-driven decision-making.
According to the Supply & Demand Chain Executive article, “The ability for an organization to accelerate the identification, experimentation and adoption of automation technologies within the supply chain has become a distinct competitive advantage for consumer markets today.” Consumer and market demand are driving today’s supply chains, likely putting logistics professionals who recognize and act on this reality through digital technology adoption at a significant advantage.