With changing trends in consumer patterns, it has become difficult for retail businesses to meet consumer demand at the right time. Without a proper demand forecasting tool, companies cannot meet an unprecedented surge in consumer demand. Businesses are left clueless without a proper solution and do not understand how to stock their inventory optimally to satisfy consumer demand.
However, effective demand planning and forecasting software can allow businesses to consider several factors influencing demand. Since, modern businesses have access to massive datasets that can help make demand forecasting and planning convenient.
What is Demand Forecasting?
It aids organizations to take decisions wisely about capacity planning, profit margin, capital expenditures, supply chain operations and more. It helps businesses to estimate sales and income for a particular time.
Demand planning and forecasting assists companies to avoid situations of overstocking and understocking. Demand forecasting gives you an idea of what future customers would buy and thus manufacturing is done in proper quantities to meet consumer demand. Manufacturing products in small quantities can lead to stock shortages and thus companies may lose customers. Whereas, stocking in additional amounts can charge an extra amount of money for maintenance and storage.
AI-led Demand Forecasting Software
In recent times most of the production centers utilize analytics data over the traditional forecasting methods and time series forecasting methods. Although analytics data can generate accurate predictions, they only work under the condition that consumer behavior and societal trends are constant.
This is where an advanced demand planning and forecasting solutions is required to leverage machine learning and artificial intelligence technology to respond to and report fluctuating consumer trends. Manufacturers have been utilizing machine learning for quite some time now, and thus the focus is now on utilizing its benefits for demand forecasting. Historical sales data clubbed with cyclical forecasting, and promotional analysis can be utilized for optimizing inventory.
Businesses should consider new trends, learn from historical data and access detailed transparency into future demand so planners can consider future requirements and existing orders and thus reduce stock outages/overstockings. Production centers need to use predictive analytics for short-term and long-term demand forecasting for generating accurate results. With demand forecasting tools, you can also have real-time data in hand that utilize machine learning to fill in the gaps, make accurate estimations, and generate a reliable data set by refining the information.
5 Demand Planning & Forecasting Methods
Manufacturers can effectively prevent stock outs by using ML and AI to generate forecasts on demand.
1. Historical Data Method
Examining historical sales data is a practical initiation point for any business. The historical data method assists you in obtaining a rough estimation of demand or services by supervising and assessing the low and high demand periods. You can thus generate a baseline prediction. However, to analyse such massive historical datasets and to arrive at a baseline number is not an easy task. This is where an AI-powered demand planning software can help you establish this baseline quickly by considering the past sales data so that you do not have to sift through massive datasets.
2. Predictive Sales Analytics Method
Predictive supply chain analytics assist you in forecasting demand and understanding aspects that boost sales and how customers behave in particular conditions. A clear transparency is offered by the combination of advanced IoT and ML algorithms in every stage of the supply chain for building a demand forecast. Demand forecasting software can aggregate data from market surveys, customer feedback, CRM, ERP, social media, and various other sources thus helping you ascertain certain consequences and determine relationships between various factors.
Businesses that undertake a data-driven approach have a better chance of adapting to the changing consumer needs and responding to the fluctuations quickly. Thus, organizations should implement a powerful tool that captures demand signals and shifts in real-time while adjusting the current forecasts to house the changes.
3. Market Research and Delphi Method
Market research involves talking to the consumers and gathering data provided by them. Market research allows you to get valuable feedback from consumers. Delphi’s method involves considering experts’ opinions on market demand. Both methods allow you to interact with people and draw on the knowledge of people having expertise. Success depends on the available resources and time. Gathering and examining data collected through this method is time-taking and requires professionals to predict the market. An AI-powered demand sensing software can help you to quickly analyze the data gathered from customers and can make use of the local market knowledge and various resources to offer forecast accuracy, thus making the job faster and more efficient for informed decision-making.
4. Demand Sensing Method
One of the most effective ways of demand planning and forecasting is demand sensing which uses ML to represent real-time variations in buying patterns and assists you in creating a data-driven supply chain. Demand sensing helps you utilize real-time demand signals so that your supply chain can react quickly to unanticipated demand shifts. A robust demand forecasting tool lets you get real-time visibility into short-term demand while improving forecast accuracy and service levels.
5. External Macro Forecasting Method
By examining patterns in the macro economy and identifying how they would influence the business goals, you can reimagine your business aims and objectives. Comprehending the more significant market forces, you can supervise the availability of raw materials and other aspects that can influence manufacturing and the overall supply chain. An AI-led tool can recognize these patterns, and you can enhance forecast quality and separate relevant patterns from market noise.
Fountain9 is a company that offers a practical and robust demand forecasting & demand sensing tool for estimating demand accurately. It considers several factors such as historical sales data, holidays, markdown events, pricing changes, promotional events, seasonality, fluctuations in consumer demand, and more to predict demand effectively. It helps optimally generate accurate forecasts and stock inventory to prevent stockouts and efficiently meet consumer demand.
Find out what more Fountain9 can do for your business – book your demo today!