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demand and supply

Building a Resilient Supply Chain for a CPG Company to Navigate the Covid-19 Crisis Using Demand and Supply Mapping Solution

The coronavirus outbreak has put many industries in a state of flux, and the consumer packaged goods sector is hardly an exception. Shortage of essential supplies and empty shelves of supermarkets are some of the visible impacts of the global supply chain disruptions caused by the Covid-19 pandemic in the CPG industry. Consumer packaged goods companies that are dependent on global sourcing are severely impacted as major countries such as China and the US have temporarily stopped global exports. If the same situation continues, it could create severe impacts on the global economy and lead to an unforeseen disruption of business operations. As such, consumers packaged companies should take actions to mitigate supply chain disruptions and build a resilient supply chain for the future.

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Business Challenge

The client is a leading player in the Canadian CPG market. Leveraging over 20 years of experience, the client operates over 150+ retail outlets in and around Canada.

As the consumer packaged goods manufacturer solely depended on China for its raw materials, the rapid spread of the covid-19 pandemic compelled the client to bring operations to a complete stop. This subsequently resulted in a palpable short-term impact on the company. Even the client was unable to serve their customers’ demands due to warehouse discrepancies and inventory shortages. In an attempt to cover up for the losses and reassure customer trust, the client was looking to understand the demand impact specific to the business and devise short-term demand-supply synchronization strategy. However, considering the complexities involved owing to the rapid spread of the covid-19 pandemic, this seemed to be an uphill task that required understanding changing customer buying behavior and activating alternative sources of supply. This is when the client sought to collaborate with Infiniti Research to leverage their expertise in offering demand and supply mapping.

By leveraging Infiniti’s demand and supply mapping solution, the client also wanted to:

  • Conduct scenario planning to assess the impact of the covid-19 pandemic on their business operations
  • Determine required supplies and manage demand and supply requirements
  • Identify the company’s direct suppliers and understand their ability to meet supply requirements and potential risks
  • Understand the flexibility of key suppliers to shift production and purchase order fulfilment to other locations
  • Activate secondary supplier relationship to secure additional inventory and capacity
  • Improve visibility to supply chain risks
  • Focus on production scheduling agility

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Our Integrated Approach

As a part of the demand and supply mapping engagement, the experts at Infiniti Research followed a four-phased approach.

#1: The initial phase of the demand and supply mapping engagement involved creating transparency on the multitier supply chain. This involved working closely with production teams to identify materials sourced from high-risk prone areas due to the coronavirus outbreak. This phase of the demand and supply mapping engagement also involved establishing a recovery plan for critical suppliers.

#2: The next phase of the demand and supply mapping engagement involved optimizing production and distribution capacity. Also, aligning IT system and support to ensure employee safety and support work requirements was done. Besides, the experts at Infiniti Research focused on conducting scenario planning to understand the impact of the covid-19 pandemic on the client’s operations.

#3: The third phase of the demand and supply mapping engagement involved managing cash flow. The experts recommended the client to focus on freeing up cash locked in other parts of the value chain and negotiating with suppliers.

#4: The final phase of the demand and supply mapping engagement involved focusing on Tier 1 supplier risks. This was done by gaining visibility into Tier 1 supplier inventory, warehouse, and order fulfilment status.

Results Obtained

With Infiniti’s demand and supply mapping solution, the client was able to create transparency on multitier supply chains by establishing a list of critical components, determining the origin of supply, and identifying alternative sources. Also, the experts helped the client to estimate available inventory along the value chain and manage demand and supply requirements. Besides, the client was able to optimize production and distribution capacity to ensure employee safety.

Also, the client was able to understand the demand impact specific to their business and subsequently devise a short-term demand-supply synchronization strategy. Moreover, by evaluating alternative inbound logistics options, they were able to maintain productivity and maximize profitability.

The experts recommended the client to develop a treasury plan for focusing on cash flow. Besides, the experts helped the client to identify their key direct suppliers and understand their ability to meet supply requirements and potential risks. This further helped them to efficiently manage inventory and capacity shortages.

The experts also helped the client to identify alternative suppliers in non-impacted regions of the world and improve visibility to supply chain risk. As a result, the client was able to build a resilient supply chain for the future and manage warehouse discrepancies and inventory shortages.

Find out how we can help your organization to prepare for the rebound, gain agility, and ensure rapid response

Demand Forecasting in Retail: Critical Mistakes to Avoid

Companies in the retail industry rely on demand forecasting to support inventory planning and distribution functions across their sales channel. Accurate demand forecasting requires companies to have a clear understanding of the right data and the repercussions of incorrect demand estimation. If done correctly demand forecasting techniques can help companies across the consumer goods spectrum to optimize operations and increase value while reducing additional costs. However, the absence of an accurate demand forecasting strategy could result in a faulty business strategy. To avoid this, we uncover some common mistakes made by companies in the retail industry during demand forecasting.

Smart forecasting is a powerful tool in today’s increasingly competitive retail landscape. Request a free proposal to know how we help companies to make information-driven decisions that optimize revenue.

Demand forecasting mistakes in the retail industry

demand forecastingIgnoring store-level demand

Sometimes retail companies tend to build demand forecasting models using a top-down approach in order to speed up and simplify the forecasting process. However, by not using an individual location-level unconstrained demand forecasting can result in significant under-prediction while estimating the actual demand. Furthermore, computing demand forecasts solely against prior sales don’t account for lost sales due to out-of-stocks, causing any forecasts for the future to be artificially depressed, and the cycle to continue.

Planning solely for distribution channels

Sometimes companies in the retail industry make the mistake of using demand planning solely to enhance their distribution channels and make it more efficient. Retailers will be able to churn out more from their investment if they rely on the data to optimize the production process as well. Demand planning, for instance, can be used to determine what manufacturers should be producing.

Getting the most out of your demand planning tool requires you to become familiar with its features and with several concepts related to inventory forecasting. Get in touch with our experts for more insights on everything you need to know about demand forecasting for your business.

Overlooking historical patterns

Unless a company has restructured its organization recently, altered their product or service lines significantly, there should be historical data that reflects distinguished demand and sales patterns. These patterns are the best sources to use for demand planning, because while they don’t necessarily consider current changes or possible impacts to the supply chain, they give retailers a baseline against which they can build accurate numbers for demand forecasting.

Optimizing business processes too soon

This is especially true in the case of new businesses or a recently restructured organization. Accurate demand forecasting requires adequate time to gather relevant data. Businesses that tend to undertake demand forecasting based on a small dataset that ranges over a short period are more likely to end up with adverse results.

If you have experienced any of these common dilemmas in demand forecasting, we can help you take the guesswork out of forecasting and gain the kind of actionable intelligence that produces results.

Evaluating the Importance of Demand Analysis for Your Business

What is demand analysis?

Demand analysis involves understanding the customer demand for a product or service in a particular market. Companies use demand analysis techniques to determine if they can successfully enter a market and generate expected profits to advance their business operations. It also gives a better understanding of the high-demand markets for the company’s offerings, giving them a fair idea on which markets to invest in. Demand analysis is one of the most important considerations for a variety of business decisions including sales forecasting, pricing products/services, marketing and advertisement spending, manufacturing decisions, and expansion planning.

Identifying market opportunities and meeting the market demand can prove to be challenging without appropriate expertise. Request a free brochure to learn how experts at Infiniti Research can assist you with smart solutions that cater to dynamic business needs.

Key factors affecting demand analysis

demand analysis

Common steps in market demand analysis

While there may be several methods of market demand analysis which varies according to the complexity of operations in the business, we have curated some of the commonly used steps for demand analysis:

Market identification

Identifying the specific and target market for the company’s products or services is one of the first market demand analysis steps. Surveys or customer feedbacks can be used to determine the current customer satisfaction levels. Comments indicating dissatisfaction can lead to improvements that will eventually enhance customer satisfaction. Although companies usually identify markets close to their current product line, new industries may be tested for business expansion possibilities.

Business cycle

After identifying the potential markets, the next step is to assess the stage of the business cycle in which that particular market is in. A business cycle ideally comprises of three stages: emerging, plateau and declining. Markets that are in the emerging stage indicate higher consumer demand and low supply of current products or services. The plateau stage depicts the break-even level of the market, where the supply of goods meets the current market demand. A declining stage indicates lagging consumer demand for the company’s goods or services.

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Product Niche

Once the market and their respective business cycles have been reviewed, companies will need to develop products or tailor their services to meet a specific niche in the market. Products must be differentiated from other peers in the market, so that they meet a specific need of consumer demand, creating higher demand for their product or service. It is also advisable to conduct tests in sample markets to determine which of the potential product styles is most preferred by consumers. Companies can also develop their goods in order to prevent competitors from easily duplicating their products or business strategies.

Evaluate competition

A crucial factor of demand analysis is determining the number of competitors in the market and their current market share. Markets in the emerging stage of the business cycle tend to have fewer competitors. This translates to a higher profit margin for your company. Once a market becomes saturated with competing companies and products, fewer profits are achieved and companies will begin to lose money. As markets enter the declining business cycle, companies must conduct a new market demand analysis to find more profitable markets.

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Customer needs analysis

A Closer Look at Demand Management and Its Core Components

What is demand management?

Demand management, also known as consumption management or strategic spend management, involves controlling and tracking the requirements of different business units and other internal purchasing operations. Engaging in demand management practices helps organizations to avoid gaps in supply and demand and also promote better supplier relationships. Demand management techniques also play a major role in addressing external spending factors, arranging purchase orders, and eradicating waste.

Core components of demand management

A demand management process can involve a wide range of disciplines depending on the unique processes of each organization. However, on a broader level, a demand management plan generally encompasses these core components:

Forecasting

There is more to forecasting than merely loading data into a spreadsheet, forming a basic view of projected sales based on that data, and then adjusting the business plan accordingly. Including multiple scenarios in the forecasting process prepares the company for virtually any unexpected twist or turn.

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Supply planning

Irrespective of the industry, the marketplace is highly dynamic. Furthermore, there may be constant changes in the supplier landscape, wherein new suppliers may spring up in the market or an existing supplier may go out of business. But if companies are not prepared to meet these changes and only react when they occur, chances are that they may get left behind among the other players in the market. By maintaining deep visibility into the capabilities and business health of all the suppliers, organizations can be positioned for continued success irrespective of what happens in the global business climate.

Demand analysis

Basing the demand decisions only based on the sales data may be a huge mistake for companies. Most ERP systems record sales based on when a product has been shipped and not based on when it was first ordered. Only by keeping an accurate view of order history can they paint a realistic picture of the company’s demand—and then strategize on ways to meet that demand year after year.

Sales and operations planning

The idea that the supply chain organization can operate in a silo, free from the input of executives is outdated. Over the past two decades, organizations that make and sell products have embraced sales and operations to involve a wider range of stakeholders in every supply chain decision—and to incorporate supply chain information and needs into every business decision. 

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Demand management

Demand planning vs demand management

Demand planning is the process of forecasting consumer demand for a company’s products or services well into the future. It is usually associated with sales, but it is closely tied to supply planning, which seeks to ensure that a company has enough supplies to meet the market demand. Ideally, a company’s demand-planning process helps maintain supply levels that meet demand or just slightly exceeds demand.

Demand management, on the other hand, is similar to demand planning, but demand management looks at consumer demand in the short term. Demand management is the oversight of current consumer demand to ensure that a business does not experience any loss of profits. Demand management is much more capable than demand planning when it comes to taking advantage of business opportunities in response to local events.

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