Calculating demand movements to project the next actions is the oldest yet the most effective trick you can do
In our Why We Calculate Product Propensity? post we stressed the idea of knowing the customer behavior movements before they even happen. Hence, in this article story is no different. However, there is a catch: demand includes every movement of the market. Customer behavior and the financial movements are the key factors of the demand forecasting. Although it is the oldest thing one can do for a successful sale strategy, correct calculation and timely projections are more important than mere predictions. That is, prediction is the best you can do to forecast movements of consumer; however, predictions based on reliable models and techniques are now a must, rather than beneficial auxiliary strategies.
Unlike some other key elements of the market behavior, demand forecasting is pure data analytics. In order to have accurate measurements of the demand in a given timespan, algorithms of items, sales numbers, transactions, incentives, past events, and trends are used accordingly to predict with the highest confidence. Essential prediction models start from past data examinations so that patterns and trends over the years can be observed. Although there are a ton of theory to practice forecasting, every other type helps decision-makers to correctly anticipate and act for the staffing, logistics, and inventory.
Determining the budget of the organization is no easy task as there are infinite amount of parameter to add in the calculation. However, once an accurate model is formed, the budgetary tasks as wells the other task related with efficient sales become so easy. Although there is a belief that there are some disadvantages of running a demand forecasting due to unpredictable nature of human behavior and other things, an accurate and reliable model predicts the movements with a confidence interval where trends and some risk factor are included. Hence, having a projection while having risk factors in mind is way better than having no forecasting and leaving everything to luck.
Most beneficial part of the demand forecasting is its aid on the retaining efficiency and productivity. With a reliable forecast, you can have a relax hand in planning the supply chain organization. Scheduling the production, warehousing and shipping in according with an accurate prediction help more than depending on luck. Ensuring enough cash flow also helps decision-making process to have more beneficial strategical actions. Therefore, combining all of these suggest only one thing about demand forecasting: it helps you to create an accurate strategy for most possible events.
As mentioned above, demand forecasting is old, however, the newest techniques are used for it for a long time too. Using big data parameters or using artificial intelligence to calculate the complex models are getting more and more frequent. The frequency comes from the accuracy and the reliability of the method used. In order to have a deeper understanding of the demand data and other forms of parameters, the merits of 21 st century must not be overlooked. Only this way a successful organization reach its potential: knowing the future.