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demand forecasting in retail

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.

demand planning and forecasting

Enhancing Savings in Operational Cost by 23% for a Manufacturing Firm | Infiniti’s Demand Planning and Forecasting Solution

Demand Planning and Forecasting Solution for a Manufacturing Firm

With increasing demand fluctuations, manufacturing companies now face greater difficulties in predicting and responding to evolving customer demands. Also, manufacturing companies are under the pressure to revamp their supply chain management strategies to gain a stronger foothold in the market. As such, manufacturing companies are now partnering with firms like Infiniti Research to leverage their expertise in offering demand planning and forecasting solutions. By leveraging demand planning and forecasting solution, businesses can maintain a fast and agile supply chain that adapts easily to fluctuating demands and production needs.

Wondering how to respond to customer demands faster? Our demand planning and forecasting solution can help. Request a FREE proposal.

Business Challenge

The client is a food manufacturer based out of Germany. Globalization, fast-changing market conditions, quality issues, regulatory compliance, and technological advancements posed supply chain challenges for the company. Also, the client was facing issues due to a high number of unfulfilled orders, inaccurate demand forecast model, and rising inventory holding cost due to inappropriate planning. The client engaged Infiniti Research to develop an approach to tackle these supply chain challenges.

Also, with Infiniti’s demand planning and forecasting solution, they wanted to:

Adapt to the fast-changing marketplace – The client was facing increasing pressure to adapt to a fast-evolving marketplace by effectively catering to the needs of the increasing population. With Infiniti’s demand planning and forecasting solution, they wanted to effectively manage the company’s production and distribution processes.

Efficiently deal with unplanned production changeovers – During conditions of stock-outs and overstocks, the client had to deal with unplanned production changeovers to keep up the business. However, this heavily impacted the company’s overall profits. With Infiniti’s demand planning and forecasting solution, the client wanted to gauge the potential market demand and maintain adequate stocks to deal with unexpected demand fluctuations.

Reduce product obsolescence cost – With increasing obsolete inventory, the client witnessed a dip in their overall revenue. With Infiniti’s demand planning and forecasting solution, the client wanted to accurately forecast the product demand in advance and reduce product obsolescence cost.

In today’s competitive marketplace, manufacturing companies will need to incorporate efficient demand planning techniques to adapt to fast-changing market conditions. CONTACT US to leverage our demand planning services.

Solutions Offered

The engagement involved a market research study to understand market transformations and developments. The experts also assessed the company’s business processes and analyzed the challenges. The next phase of demand planning and forecasting engagement involved a demand management study. Infiniti’s demand management study helped the client to analyze and estimate evolving demands in the market and deal with issues related to supply-demand mismatch.

The experts also conducted a market intelligence engagement. This phase of the demand planning and forecasting analysis engagement helped the client to stay abreast with market transformations and gain insights into the factors impeding the food product demand in the market. This helped the company to efficiently deal with unplanned production changeovers by maintaining adequate inventory.

Results Obtained

With Infiniti’s demand planning and forecasting analysis, the client was able to adapt to fast-changing market conditions, reduce product obsolescence cost, speed-up their production process, and enhance sales. Also, with Infiniti’s demand planning and forecasting solution, the experts supported the client in efficiently managing their production and distribution process. This subsequently helped the client to enhance supply chain efficiency and achieve savings by 23% in operational cost.

Request for more information to know how our demand planning and forecasting solutions can help your business.

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