Flexible manufacturers have to observe and listen carefully to the different ways consumers are changing the manner they consume their products. Demand Forecasting (DF)is becoming a general practice in many organisations to anticipate to all these rapid changes.
These are some of the benefit DF brings to your Supply Chain:
1. Increasing Customer Satisfactions: Forecasting product demand means that enough product is available to fulfil customer orders with short lead time and on-time.
2. Reducing Inventory Stockouts: Demand Forecasting helps you to time your purchases to correspond to when sales need to be fulfiled. The less time inventory spends in the warehouse; the less money you are paying to let it just sit there waiting to be sold.
3. Scheduling Production More Effectively: listen carefully to the way customers consume your product and respond and adapt to these changes to depend less on predictions.
4. Lowering Safety Stock Requirement: control the direct impact in the planning of inventory, so you do not need to carry high safety stocks to manage such events by:
• Developing production requests for manufacturing operation.
• Planning for new product launches.
• Planning for promotional activity.
• Planning for seasonal variations in demand.
5. Managing Shipping Better: To ensure we have enough capacity to ship material on time and the number of people you will need.
6. Improving Pricing and Promotion Management: developing the ability to forecast the impact price changes will have on both revenue and gross margin dollars when timed well. Integrating distributor-level promotions and detailed forecasts will allow you to improve the flow of goods. It also achieves better results concerning availability and stock fill rates.
7. Negotiating superior terms with suppliers: provide suppliers with a sales projections plan that is based on logic and research to assure them you are someone who will give them repeat business over the long term, in this way you gain authority and credibility.
8. Plan Sales Strategies: use Demand Forecasting to decide on promotions, pricing and purchasing. Enable the collaboration with different sections and functions, like Product Management, Marketing, Product Design and Sales.
If you want to take advantage of Demand Forecasting to get a handgrip on either future revenue, plan production capacities or manage stock outs, it would be easier to do so when working in a collaborative team, in which each area is influenced by the other and conveying positive outcomes to your company.
Conclusion: The importance of Demand Forecasting is unquestionable when applied to your Supply Chain, generating great benefit whatever business you are. The analysis of your Demand Forecasting must be kept simple to get all these benefits.
Dave Food
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