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The Benefits of Demand Forecasting

By August 4, 2022No Comments

Each business is different and each has its own unique needs and challenges, but some things remain the same for all. Demand forecasting is a crucial step for any inventory-based business. Why is this important? A few of the primary benefits of this complex but vital process include:

  • Supply Chain Efficiency
  • Optimized Inventory Management
  • Simplified Labor Scheduling
  • Cash Flow Assurance
  • More Accurate Budgeting
  • Optimized S&OP 

Supply Chain Efficiency

When you accurately forecast demand, you can order supplies and inventory to arrive at the right moment rather than scrambling at the last minute. Demand forecasting can tell you when sales will ebb and flow for each product type, allowing you to plan maintenance or other scheduled disruptions for times when demand will be lowest. 

You can also contact suppliers to order additional inventory and supplies by looking ahead to coming spikes in demand. When you can predict exactly what is likely to sell, in what quantities, and when, you can ensure accuracy and efficiency across your entire supply chain.

Optimized Inventory Management

Inventory management is a complex task. Order too much inventory and you could tie up too much capital, and too much warehouse space, eventually liquidating the excess at a loss. Order too little, and you won’t be able to meet consumer demand, sending loyal customers to your competition. 

Not only does demand forecasting help you know how much of each product to order, it also tells you where to store each item and at what volume. Stores in the north may have a higher demand for a specific product, while stores in the south hardly sell that item at all. You want to ensure that you’re stocking the right items in the right places at the right volumes to meet demand without waste.

Simplified Labor Scheduling

Probably the easiest demand forecasting is the obvious knowledge that sales will likely spike in November and December due to holiday shopping. Retailers across the country hire additional staff and extend store hours to ensure they can meet the demand. 

With accurate and complete demand forecasting, you can make similar adjustments throughout the year. You’ll be able to ensure that you have the staff needed to meet demand at your busiest and schedule fewer hours during periods of lesser demand. 

Cash Flow Assurance

If you can accurately forecast demand, you can predict the ebbs and flows of incoming cash. Understanding these peaks and valleys allows you to ensure you always have enough capital on hand to cover the bills and pay vendors and suppliers on time. Without this, you may find yourself in a tricky situation, unable to afford the inventory you need to meet demand when sales increase.

More Accurate Budgeting

Understanding and predicting future sales allows you to create a more accurate budget. You can shift between paid marketing and free or low-cost efforts as needed. Add some funding for a social media campaign to publicize upcoming product launches. Plan for leaner times and pare down spending to adjust or offer bonuses to your best employees, knowing that you’ll have the cash to cover them without disrupting operations. 

Optimized S&OP 

Sales and operations planning allows you to get your entire organization on the same page and working toward the same goals. It means you’ll be more effective overall, with a stronger bottom line, better communication across your company, and more accurate decision-making abilities. But all of this starts with accurate demand forecasting.

Improve Your Demand Forecasting with Blue Ridge Global

While it may seem impossible to predict the future with such accuracy and precision, it’s far simpler when you have access to the right data. Accurate demand forecasting doesn’t have to be beyond your reach. 

Blue Ridge Global offers a cloud-based supply chain solution that allows you to forecast based on detailed, data-driven insights rather than just hints and guesses. Our forecasting combines hard, cold data science with real human inputs, allowing you to harness the power of AI and machine learning together. 

If your organization could use this level of detailed data, contact us today. Or schedule a customized demo to learn how we can fit into your business planning.