Demand Planning Takes on New ImportancePost-pandemic Forecasting Requires Clear Insight
It seems everyone is talking about the shock to the world’s supply chains triggered by the pandemic and its nascent recovery. With much of the focus on how to get raw materials when and where we need them, less of the talk has been on how much we really need. Demand forecasting is a critical component in the success of every manufacturer. Some manufacturers are seeing rapid growth in demand for products that were formerly secondary or tertiary areas of focus. Others are seeing demand drop for former best sellers. How can manufacturers better align demand planning with actual demand to reduce waste and boost profitability?
Playing the Odds is Risky
Demand forecasting, like playing the stock market, has always been part art, part science. You rely on the best available data inputs, past transactions, and gut instincts. The most successful demand planners know how to balance the three, and when to trust one over another.
Manufacturers who rely primarily on past transactions to predict future demand struggle during the recovery as customer buying patterns change. We cannot base demand planning in 2021 and beyond on the historical activities and patterns of 2019 and the first quarter of 2020.
Visibility Leads to Clear Decision Making
The goal is to understand and to predict, with a reasonable degree of accuracy, what demand is going to look like in three to six months, or more. Easier said than done, of course. But, in our experience working with manufacturers to optimize their demand forecasting capabilities, we’ve learned that visibility is crucial. Insight into inventory levels, current lead times, past seasonal trends, customer sales forecasts, win rates, average order value, product mixes, and more must be considered together to inform and advance demand forecasting.
Net at Work focuses on helping manufacturers gain the decision-powering insights necessary for accurate demand forecasting. We invite you to learn more about how people, processes, and technology come together to deliver that visibility in a new whitepaper, The New Normal for Supply Chain Management: The Importance of Accurate Demand Forecasting. Download your free copy here.