Supply chain forecasting is the process of predicting supply, demand or pricing of a product or product range in a particular industry. This is done by analysing past and present data about a product or product range, to help inform a business about potential demand. This then enables them to make a decision based on planning, budgeting and inventory to help meet demands and prevent experiencing a loss.
Why is supply chain forecasting important?
Data and information used for forecasting can help to ensure the smooth running of a business. Bey being able to predict customer demand, a business can fulfil orders on time and reduce the risk of running low on inventory.
Demand forecasting helps a business to determine how much product a customer is likely to order during a specific week, month, quarter or trend. This allows a business to ensure a suitable volume of inventory is on hand to fulfil orders, whilst being able to effectively price these products to match the demand.
With forecasting, comes better planning. These insights enable a business to streamline and optimise their supply chain, for faster delivery whilst ensuring suppliers can meet customer demands. This builds a level of trust between a customer and a business, helping to retain customers and attract new ones.
Benefits of supply chain forecasting
There are many benefits of supply chain forecasting, this includes:
- Optimises the supply chain process
- Helps to streamlines supply chain management
- Reduces lead time
- Increases sales
- Saves on cost
- Faster delivery
- Improves overall efficiency and customer experience
What forecasting methods are used in supply chains?
In supply chain forecasting, there are two common methods used. These include:
- Quantitative method
- Qualitative method
This method focuses on the analytical and data-driven method, using statistics to provide insights to a business. This includes looking at prices, sales, seasonality and income.
This method is used when there is a lack of past data to provide insights due to circumstances such as a new product launch or social media trends. The qualitative method uses research and experience to make predictions based on particular factors, such as expectations, feelings, opinions and preferences.
How Lesters can help
Our central location allows us to provide efficient delivery services including same-day and multi-drop delivery. We are also able to provide sustainable packaging solutions through our sister company Lesters Packaging. For more information get in touch with our helpful team today.