Advanced Demand Forecasting Part 1: An overview
Demand planning is vital for virtually every organization, but it typically represents an enormous risk. Understanding how and why demand moves provide an incredible advantage: it can not only help mitigate this risk but help drive even greater demand.
Optimizing demand forecasting
Most competing demand forecasting solutions have only one capability: simply predicting sales or demand. While having an accurate sales forecast number is imperative for planning your business model, understanding the various factors that impact demand enables you to optimize business operations to better capitalize on it.
Advanced Demand Forecasting is designed to make 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.
Some of the key capabilities that separate Advanced Demand Forecasting from its competition includes how it:
- Considers internal and external factors affecting the business and accounts for them when developing predictions
- Shows how individual factors, 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 extra ad placement, and tells you how that variance impacts demand and its 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 solution’s baseline and leverages historical company information, such as past sales, and uses that to help predict future performance. It then looks at factors that affect individual businesses and develop forecasts based on those factors to discover which ones have the highest impact.
Do I really need Advanced Demand Forecasting?
As technology evolves, every market is becoming more analytically driven and cost-effective.
While many organizations might subscribe to the concept that there is no need to fix something currently working, most eventually discover they need to optimize their demand forecasting to remain competitive.
The reality is that Advanced Demand Forecasting represents an opportunity to gain an advantage over the competition, and the sooner organizations optimize their operations, the greater the competitive value they will receive.
For a more in-depth and technical look at the engine that powers ADF, read Part 2 of this series.