Traditional Demand Forecasting
Companies rely on historical sales data to predict future demand. This method is straightforward and does not need particular input. However, it is less accurate since it does not consider factors that could affect the future direction, such as changes in the economy or consumer behaviour. It all causes increased production costs, overstock, and failure to meet needs.
Modern Demand Forecasting
Companies use innovative cloud platforms such as Manufacturing Cloud to predict demand precisely using AI (Artificial Intelligence). In this way, manufacturers/businesses can meet requirements, plan production, optimize the supply chain and manage stocks closely.
How to Create Demand Forecasting?
To create an accurate demand forecast, companies need to clearly understand their customer base and the factors that affect their purchase decisions. Manufacturers need tools to be implemented in their system to get these data, such as the Salesforce Manufacturing Cloud. They must also be able to track and analyze data to find patterns and trends.
Once the demand forecast is drawn up, it can be used to develop a supply plan that will ensure that the required resources are available when they are needed. This includes ensuring that the proper inventory levels are kept, that production is planned efficiently, and that transport and logistics are coordinated to get the product to the client on time.
How Demand Forecasting Helps Manufacturers
Demand forecasting is an integral part of supply chain management. It helps manufacturers plan production and inventory levels to meet customer demand. By understanding future demand patterns, companies can avoid storage and excess stocks while reducing the cost of carrying supplies.
Here are the top advantages of demand forecasting for supply chains and manufacturers.
Improved Forecasting Accuracy
As data is collected and analyzed over time, businesses can improve the accuracy of their demand forecasts, resulting in even more efficient operations.
Increased Competitiveness
By using demand forecasting, businesses can gain a competitive edge over their rivals by being better prepared to meet customer demand.
Improved Planning
With accurate demand forecasts, businesses can make informed decisions about production levels, inventory levels, schedules, pricing, and marketing strategies.
Reduced Costs and Inventory Levels
By planning production and inventory levels based on demand forecasts, businesses can avoid the costly consequences of over-or under-production, such as stock-outs and excess inventory.
Better Customer Service
By predicting customer demand and having the necessary inventory on hand, businesses can supply a better level of customer service, leading to increased sales and customer loyalty.
Greater Flexibility
By being aware of future demand trends, businesses can be more flexible in their production strategies, adapting quickly to changes in the market.
