Advanced Demand Forecasting Part 1: An Overview
Planning for the future represents the largest risk a company makes each year. Understanding how and why demand moves provide an incredible advantage in the market place.
Most demand forecasting solutions have only one capability, usually simply predicting sales or demand. While having an accurate sales forecast number is imperative for planning your business model, Advanced Demand Forecasting enables you to optimize. Advanced Demand Forecasting makes predictions over time and adjusts itself to the ongoing fluctuations in demand. This solution does not sacrifice accuracy or make compromises; Advanced Demand Forecasting shows you what influences the forecast and how you can optimize it.
Here are the key capabilities that separate Advanced Demand Forecasting:
- considers internal and external factors affecting the business and accounts for them when developing predictions
- shows how each individual factor – such as weather or promotions – contributes to sales and demand
- takes an incremental value from each factor – such as one additional degree in temperature or one additional add placement – and tells you what how that variance impacts demand and to what extent
- predicts demand on a company-wide, geographical, and an individual store level
How is the solution able to do this? Advanced Demand Forecasting is not a one-size-fits-all solution. It is uniquely tailored for each business and takes about 6+ months to deploy. Time Series Forecasting forms the baseline of Advanced Demand Forecasting and leverages historical company information, such as past sales, and uses that to predict future performance. We look at factors that affect each individual business and develop forecasts based on them to discover which ones have the highest impact. For a more in-depth and technical look at the engine that powers Advanced Demand Forecasting read Part 2 of this series!
So do you need Advanced Demand Forecasting? Honestly, it’s more a question of when rather than if and the answer to that depends on your organizational needs. As technology evolves, every market is becoming more analytically driven and cost-effective. Most organizations are perfectly happy operating with commonplace demand forecasting functionalities until the day they need to optimize in order to stay ahead of or keep up with competitors. The sooner your organization implements Advanced Demand Forecasting, the sooner you optimize your operations, and the greater the value returned.