It would be great if we all had a special ability to predict the future.
But since superpowers are out of the question, we must make do with what we have.
In the case of supply chain management, there’s supply chain forecasting. Here’s a rundown of four key reasons why supply chain forecasting is necessary for your business today.
Let’s jump in!
1. Supply Chain Forecasting Helps to Decrease Inventory Stockouts
Supply chain forecasting is essential even if you’re working in a just-in-time manufacturing system. That’s because it’ll assist you in timing your purchases of items to align with when sales have to be fulfilled.
The faster you get your inventory out of your warehouse, the less you’ll end up paying for it to simply sit there until it’s sold.
Forecasting is also critical if you’re working with suppliers who have long lead times, such as China or India.
If you’re purchasing from these types of suppliers, sending a forecast of customer demand is paramount so that your suppliers can easily arrange their raw material supplies in anticipation of your actual customer orders.
2. Enhance Promotion and Pricing Management
Let’s say that your business has many promotions running at the same time.
If you integrate forecasts and promotions at the distributor level, this will help you to enhance goods’ flow. Ultimately, you’ll experience better results for your stock fill rates and availability.
Likewise, improving your forecasting ability in the area of price changes will have a positive impact on your gross margin and revenue dollars.
3. Schedule Production in a More Effective Manner
This can be challenging, but it’s paramount to keep your business moving in the right direction.
An essential step in this is paying attention to how demand is shifting today before attempting to make predictions.
An adaptive manufacturer listens and watches closely to how customers are consuming its products. If you adapt and respond to such changes, you’ll be less dependent on prediction.
4. Reduce Your Safety Stock Requirements
The following are a few scenarios you should be planning for through supply chain forecasting:
Seasonal changes in demand
The launch of a new product
Production requests going to manufacturing operations
If you forecast effectively in these areas, then carrying high safety stocks to manage these events will be unnecessary.
How We Can Help
We are passionate about helping any shipper to optimize its in-transit inventory through analyzing and tracking shipments’ movement across the globe.
We constantly look at data that is publicly available to monitor how external factors will impact your supply chain.
We can additionally leverage data from your enterprise resource planning system to determine the behavior of the supply chain nodes inside your company.
Also, our low-cost pallet tracker will allow you to assess how both your and your customer’s supply chains are behaving.
Get in touch with us to find out more about how we can help you to strengthen your bottom line through efficient supply chain forecasting.