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Demand Forecasting: How To Get It Right
One great idea for a business, however, limits growth and profitability, and as a result, customers eventually ask, “What’s next?”
In a landscape where competition is rife, and consumers are both discerning and demanding, new markets are quickly exhausted, and subsequently, interest is lost.
To stay ahead in this dynamic environment, businesses need to give customers what they need before they even know it. Consequently, demand forecasting plays a crucial role in making informed decisions about the future of a business.
Demand Forecasting Explained
Demand forecasting uses predictive analysis of historical data to estimate future demand for products, goods, and services.
However, predicting future demand is not always easy since people can be unpredictable and fickle.
Getting it right is important to avoid sitting with a warehouse full of unwanted stock or being unable to meet demand, which could harm your business reputation.
Analyzing historical data is critical because most products nowadays are not entirely new, but rather upgrades or adaptations.
Therefore, reviewing how previous iterations have performed can provide valuable insights for making future decisions.
This is why it is just as important, if not more so, than relying on your hardworking market research department.
What Affects Demand Forecasting?
Unfortunately, there’s an awful lot that can impact your demand forecasting successes, so familiarising yourself with the different factors at play is certainly wise.
Seasonality, for example, can dictate demand and you’re likely to find that certain products do better than others at different times of the year.
Competition is another factor to bear in mind and you may have to make quick and sudden changes to your business if a new solution crops up from another avenue, stealing your customers away.
Choosing The Right Forecasting Model For You
Deciding on your overall objectives first will help make sure you pick the right demand forecasting technique for you and your brand, enabling you to achieve your goals and take the next business step.
Here are some different models you could consider:
- Macro-level: Looks at external forces and general economic conditions that could potentially disrupt commerce.
- Mirco-level: Looks at specific aspects of your business niche or industry.
- Long term: Considers any model over a year or more to identify annual patterns, seasonality, and future expansion plans.
How Can PLM Consulting Help?
PLM software is a powerful tool for driving the design, manufacturing, and release cycle of products, allowing for more efficient process management.
This framework can be scaled up for expansion and changes can be made as needed.
Using PLM software can significantly reduce guesswork and help bring the right products to market at the right time.
If you’d like to learn more about PLM, get in touch with us today to find out more.