If you only look at one demand forecasting metric ever, it should be demand deviation.

As you’ll see in this video tutorial, demand deviation is the #1 value influencing your profitability.

Take a look at some of the most successful and strategic supply chain planning professionals in the world, and you’ll see a common trend. They all keep a relentless watch on demand deviation in relation to:

1. Safety stock needed and
2. Desired service levels

Those two relational inputs, when analyzed together across a large number of items – from super steady to highly erratic – tell the most important story about your profit picture. For example,

• Where should you invest in safety stock (and where shouldn’t you)?
• How do your margins play-in?
• Where are you losing – or making – money?
• How does demand deviation define safety stock requirements?
• Why is it pointless to add new SKUs if you’re never subtracting unprofitable ones?

Watch the video now

Related podcast: “10 Inventory Numbers Every Exec Should Care About”