If you are a business owner, you have to be familiar with forecasting and demand planning. Without a doubt, it can make or break your business. You will know that you need to improve your forecasting and demand planning when you hear that your distributors are complaining about their low stock levels, which affects promotional activities.
If this continues, it is only a matter of time your profits will decline. To help you deal with this, you must open your mind to forecasting and demand planning. Even if you have someone who worries about it, it is best to understand the concept or system as an owner. Forecasting means predicting the trend. There is no way to predict the future but with the help of some materials, you can safely deduce something at the end of the day.
Demand planning will make reliable forecasts. Effective demand planning will lead to improved accuracy of forecasting, aligning inventory levels and profitability in the long run. There are many companies these days that utilise powerful demand planning software. This software will need different inputs like historical sales trend, forecast, seasonal factors and business constraints.
Here are some guidelines for improving forecasting and demand planning:
Understanding the factors that can impact the ability of your company to forecast accurately
You have to know that there are many factors that can impact the ability of your company to forecast accurately. With this in mind, it can help you plan ahead. There are many uncertain things in life but if you thoroughly plan, there is nothing you will miss. You have to think about the level of supply, the reliability of your transportation system and other variables.
Preparing for change to succeed at demand planning is critical
As a business owner, you need to determine the core competencies that your company needs to succeed in demand planning. Before you start implementing and changing the process, you have to prepare your people and the entire system for change. You should ensure that your company has the right skill set, training programs for the employee and more importantly, you have to define or set the methods for gauging the performance so you will know it is effectiveness.
Expect for the unexpected when you are forecasting and demand planning
You cannot accurately predict the future. You have to accept that sometimes things will not go according to plan. When this happens, you have to be ready. When you are forecasting and demand planning, you should also tackle possible alternatives and back up plans in case something will not work out. It is important for the company to have the flexibility to adjust to changes without compromising the availability of the products or materials to the market.
Always consider frequent measurement and quality review
When you implement a plan, it doesn’t mean you will be successful right away. You have to check the performance and conduct quality review periodically to determine if your predictors are working or not. You have to follow up and evaluate if the systems in place are effective or not. You may need the feedback from distributors and consumers to help you determine the success.