Infiniti’s Demand Forecasting Solution Helped a CPG Company Save $7.8 Million With Accurate Demand Forecasts
Despite the growing economy, consumer packaged goods (CPG) brands in the Midwestern United States are reeling under the pressure from shifts in customer behavior and buying patterns. CPG companies are also facing unique challenges pertaining to high demand uncertainty, frequent new product introduction, and quality requirements. Of all these challenges, demand uncertainty and supply chain [...]READ MORE >>
Despite the growing economy, consumer packaged goods (CPG) brands in the Midwestern United States are reeling under the pressure from shifts in customer behavior and buying patterns. CPG companies are also facing unique challenges pertaining to high demand uncertainty, frequent new product introduction, and quality requirements. Of all these challenges, demand uncertainty and supply chain disruptions have put pressure on CPG companies to accurately identify the target stock levels to meet the rising market demand. In this context, CPG manufacturers are realizing the importance of leveraging demand forecasting solutions to accurately plan production, manage inventory, and maximize profits.
The client is a CPG manufacturer and supplier based out of Midwestern United States. The company relied on its historical data alone to predict their product demand. Due to this, they were facing difficulties in identifying current and future product demands. Also, the company faced challenges in identifying the target stock levels to meet the rising demand for products. The company’s inability to accurately forecast the product demand not only impacted their sales rate but also eroded customers’ trust. The client, therefore, wanted to accurately predict the upcoming sales demands to make smarter decisions regarding production. By leveraging Infiniti’s demand forecasting solution, they also wanted to optimize inventory, plan production, maximize sales, and boost profits.
Other challenges faced by the CPG company were:
- In the case of stock-outs, the company had to deal with unplanned production changeovers to keep the business steady. This affected their profit margins. Conversely, conditions of overstock increased storage cost for the company.
- With the help of Infiniti’s demand forecasting solution, the client wanted to speed up production by setting up processes according to the estimated demand.
- The supply and demand mismatch increased storage costs for the company. With Infiniti’s demand forecasting solution, they wanted to maintain adequate stocks to meet the demand and reduce storage cost.
- The client was facing difficulties in timely delivering products to customers, due to poor inventory control, disorganization, and lack of resources. This resulted in customer dissatisfaction. With Infiniti’s demand forecasting solution, they wanted to ensure customer satisfaction and timely delivery of products.
To help the client tackle the above challenges, the experts at Infiniti Research followed a three-phased approach.
Phase 1 – Established a baseline of data
The initial phase of the demand forecasting process involved gathering all available qualitative and quantitative data from market research, market testing, and buyer surveys. During the analysis, factors such as market size, customers expected to buy consumer packaged goods, and patterns of repeat purchases were taken into consideration. Also, the experts at Infiniti Research analyzed the client’s sales data for the past four years.
Phase 2 – Analyzed industry trends and seasonal increases in demand
The experts individually analyzed how industry trends and seasonal demand affected the client’s sales rate. Also, the experts identified the latest trends in the CPG market.
Phase 3 – Analyzed the client’s competitors’ stock supplies
The experts gathered data on the top five competitors of the client and analyzed their inventory management processes. They also identified the top products that the client’s competitors were stocking up at specific periods of time.
With Infiniti’s demand forecasting solution, the client was able to accurately fulfil consumers’ demands by timely delivery of products. With the insights obtained from demand forecasting solution, the client was able to make predictions about sales and allocate resources accordingly. The company was also able to lower safety stock (extra stock that is maintained to mitigate the risk of stockouts) and reduce idle stocks in the warehouse. This subsequently reduced storage costs for the company. Moreover, the accurate demand forecasting solution helped the company to achieve a 27% reduction in unfulfilled orders. Infiniti’s demand forecasting solution further helped the client to save $7.8 million.
Infiniti’s demand forecasting solution also helped the client avail these benefits:
Enhance CX – By ensuring timely delivery of products, the client was able to build a loyal customer base, which enhanced customer experience and resulted in higher sales rate for the company.
Lower operational cost – By accurately forecasting the inventory demand, the client was able to avoid conditions of overstocks and stock-outs. Also, Infiniti’s demand forecasting solution ensured lower inventory storage time in the warehouse. This subsequently lowered the operational cost.
Maintain an efficient production cycle – With Infiniti’s demand forecasting solution, the client was able to understand the future demands. This helped the client to adapt to the unexpected changes with a flexible inventory management system in place. This further helped the client in maintaining an efficient production cycle.
Reduce obsolete stock – By monitoring competitors and their historical sales data, the client was able to sell idle stocks at discounted prices and reduce the direct and indirect cost of keeping the obsolete inventory.
Plan sales strategies – The client was able to make better decisions on promotions, pricing, and purchasing with data derived from the demand forecasting solution. This had a positive impact on their sales and profit margins. Also, this helped the client in better inventory planning and sales forecast.
What is demand forecasting?
Demand forecasting is defined as the process of forecasting future demand for a product or service. Demand forecasting solutions help companies to make informed decisions on product pricing, business growth strategies, and market potential. Moreover, demand forecasting solution helps businesses:
- Optimize inventory, reduce holding time in the warehouse, and increase turnover rates
- Accurately plan budgets and keep operations running smoothly
- Prepare inventory and resources to meet the future demands
- Efficiently forecast sales and market potential