How Does Demand Forecasting Software Works Best For Your Business

 

Predicting customer demand used to be an art. Now, it all comes down to data.

Supply chain forecasting is close to impossible if you don’t have a better understanding of the future. Especially businesses like e-commerce supply chains because they are made up of many moving factors.

There are various methods that can be used to evaluate supply chain forecasting without hiring a psychic to predict your company’s future. In this article, we will discuss the methods and their importance for a better understanding of future prediction.

What Is Supply Chain Forecasting?

Supply chain forecasting is all about using research and data to make accurate future predictions. This evaluation helps in better inventory planning and enables you to save money and increase profits.

Although supply chain management is directly correlated with sales projection and demand planning, it also helps you with your production pace, labor costs, and product pricing.

Quantitative And Qualitative Forecasting Methods

• Quantitative Forecasting

This method uses historical data to predict the future of your products based on the assumption the future will mostly mimic the past. Various formulas and calculations are employed to narrow down predetermined forecasting measurements.

• Qualitative Forecasting

This method is utilized when historical data is not available, or the company is planning to launch a new product. This process usually involves competitor research, surveys, interviews, and studying industry benchmarks.

Why Is Supply Chain Forecasting Important?

You don’t need to be an industry expert to understand that, in supply chain — time means money.!

If your supply chain forecasting is not accurate even for a couple of days, then this scenario can affect your profits for an entire quarter or a half year. Products that are arriving late at your shipping center or warehouse will impact the overall doorstep delivery system, especially at a time when most customers want their products on the same, next, or within two days’ time. This affects your brand’s reputation and impacts the overall customer satisfaction experience. Similarly, if you look at the other side of the coin, overstocking can occur if a product arrives before it is needed. That’s why you need forecasting software that can act as a watchtower to your whole supply chain management processing.

Forecasting Methods Used In Supply Chain

1.Moving Average Forecasting

• Best suited for — Low-volume orders

This method is one of the simplest in forecasting. This process looks into data points by making an average series of subsets from complete data. Because it’s based on historical data, moving average forecasting does not give much weight to the current or existing data.

2. Exponential Smoothing

• Best suited for — Short-term forecasts or non-seasonal products

Exponential smoothing is one of the most sophisticated methods to supply chain forecasting. It uses a weighted average with the presumption that previous trends and events will mirror the future. With the amalgamation of another quantitative method, this process will help you with data-driven predictions.

3. Adaptive Smoothing

• Best suited for — In-depth analysis

This method uses a variety of variables to make a prediction. It delivers a deeper look into changes from time to time and narrows down specific patterns. Adaptive smoothing is very efficient in business forecasting.

4. Life Cycle Modeling

• Best suitable for — New products

Life cycle modeling is a supply chain forecasting method that observes the movements of a new product. This process helps businesses to monitor how a particular product will thrive in the market. It requires data from various strata, like early adopters or early or late majority.

Qualitative Supply Chain Forecasting Methods

1.Historical Analysis

This method observes historical data of a previous product and predicts the future of an upcoming or new product. Historical analysis is usually used in extended or medium-duration data analysis.

2. Market Research

Whether it’s selling a product or service, market research is the best practice used by every business. This method can help you predict how a product will perform and withstand in the market as compared to its competitors.

3. Delphi Method

In this method, a questionnaire is rolled out to a series of experts, high-end executives, and in some instances, third-party advisory bodies. The inputs given by these experts are gathered individually to avoid opinion differences. Once reviewed closely, the data is shared with the decision-making panel.

This method has proven its efficiency many times in long-term forecasting.

Making accurate forecasting and improving decision-making is the key to building a more robust supply chain planning system. But to make it happen, you need a proper tool to record and collect data. And then analyze it to make a better prediction for your business. This is where Avercast demand forecasting software comes in.

Avercast provides you with the optimum future predictions with its state-of-the-art 250+ algorithms. Our experts have put years of effort into making and providing you with the best possible forecasting available in the market, helping you use your own business data and turns it into stronger profits in no time. We make it accessible for businesses to scale up their inventory management, distribution network, and shipping orders in real-time, all this from one dashboard to avoid complexities and enhance customer experience.