Advanced Demand Forecasting
Understand and account for internal and external factors that impact demand to optimize forecasts and build responsive sales strategies
Forecast demand more accurately
Leveraging machine learning (ML) and big data analytics in demand and sales forecasting provides an opportunity to fine tune forecasts, optimize the supply chain and improve business operations. While noting that many organizations are not yet leveraging advanced analytics in forecasting, a CFO.com Special Report does note that 74% of companies responding to a 2018 survey produced more accurate forecasts when using sales planning analytics. They went on to note these organizations also reported a higher percentage of sales representatives meeting their quota and a higher percent of opportunities won.
Advanced Demand Forecasting from Neal Analytics helps provide a clear picture of where demand is heading at individual site and even SKU level by leveraging data analytics and state of the art machine learning techniques.
The solution achieves this by analyzing external and internal factors that can influence demand, including how multiple different factors can influence each other’s impact on demand. Understanding what factors are driving demand and the degree to which they impact it enables organizations to optimize their supply chain and business operations as well as develop business strategies to maximize potential sales.
Understand demand drivers
Forecasts created by Advanced Demand Forecasting are generated leveraging a form of Autoregressive Integrated Moving Average (ARIMA) that includes exogeneous factors (ARIMAX) or traditional statistical regression techniques. The solution then uses residual regression analysis to determine what factors are driving demand beyond seasonal changes.
Identifying these exogeneous factors enables organizations to understand what drives demand on a macro level and can be used to drill down into individual sites with down-to-the-hour and SKU-specific granularity. This level of granularity enables organizations to drill down to forecast for segments based on customers, products, or other existing company structures.
Advanced Demand Forecasting also enables organizations to understand:
- How incremental variances in a given individual factor impacts demand
- How variances in one factor can impact another factor (e.g. the extent to which customer wait times are reduced by increasing sales staffing)
- Which factors may have different impacts in different geographies or markets
Optimize business operations
The level of granularity offered by Advanced Demand Forecasting enables organizations to optimize their business practices, including supply chain and regional or in-store operations. By understanding demand drivers and how they affect different stores or sites around the country or world, organizations can fine tune their supply chain to more accurately support sites that see higher demand. Doing this helps support increased sales by ensuring demand is met and reduced waste by avoiding overstocked sites with lower demand.
It can also support more efficient in-store operations, such as focusing on a certain activity with customers, or even the amount of staff required on the sales floor to achieve the optimal customer wait time. These changes maximize sales without overstaffing the store or spending resources on activities that aren’t adding value.
Improving this kind of efficiency allows organizations to take action to intervene or modify business operations based on trends in demand factors, as well as identify over/underperforming sites and the underlying reasons for the high/low performance. This enables organizations to maximize the impact of every SG&A dollar spent by focusing on the specific sites and factors that can drive the highest impact.
Strategize sales plans
Understanding how factors impact each other and drive demand also enables organizations to build sales strategies to maximize potential sales. Strategies include both annual plans based on common trends and historical data (including both sales data and how variations in factors have impacted demand in the past), as well as near term tuning using high confidence forecasts or predictions for the near future.
Weather forecasts and social media analyses, for example, work great for recognizing and acting on limited time opportunities. To illustrate the example, weather data may indicate an upcoming weather storm. Advanced Demand Forecasting can identify this, measure the potential impact on the demand for umbrellas and raincoats, and forecast how it’ll impact average customer wait times. In this situation, an organization can check to see whether the extended customer wait time has a negative impact on sales. From there, they can decide how to proceed, whether they choose to reduce staff and save costs or try to mitigate the negative impact wait times may have on demand. If the latter, Advanced Demand Forecasting enables the organization to fine tune tactics to mitigate wait times whether it be through increased sales personnel, an in-store promotion, a combination of the two, or some other tactic altogether.
Organizations lack the timely data to make optimization decisions when it matters. Advanced Demand Forecasting delivers a great deal more flexibility to adapt and strategize based on sudden or unexpected events. While rigid, traditional forecasting models make ad hoc adjustments based on significant events difficult, Advanced Demand Forecasting can be rapidly adapted to add and account for new demand factors.
Neal Analytics has experience delivering unique solutions for unique business challenges across virtually all industries. Advanced Demand Forecasting has been designed to be quickly deployed and highly customizable based on an organization’s unique business needs and challenges, including requirements for multiple forecast timeframes and specialized models for specific segments.
Leveraging a team of seasoned business consultants and data scientists, Neal Analytics can also help organizations start forecasting more accurately by:
- Working with customers to understand their exact forecasting needs and challenges
- Leveraging industry best practices to ensure forecasting accuracy while maintaining data and security compliance standards
- Offering flexible engagement models that enable Neal to support organizations however they need
Neal Analytics is also an award-winning Microsoft Gold Partner, which reflects our deep expertise migrating data and apps to Azure and other cloud platforms.