Demand Forecasting is the process of using historical sales data to estimate an expected forecast of customer demand. For retailers, Demand Forecasting provides an estimate of the amount of goods and services that customers will purchase in the near future. In this blog we give 5 reasons why Demand Forecasting is the future for retail and how you can make it happen.
1. Sufficient stock
A significant impact on the supply chain, as a result of increased consumer spending or shopping, is depletion of inventory. When it's possible to customize your customer store forecasting solution based on expected store volume growth, production, inventory retention, and expedited fulfillment can be implemented seamlessly. This allows retailers to maintain adequate inventory, reducing the likelihood of out-of-stock situations.
2. Cost-Effective Marketing
Marketing and promotion is important in any situation, even when sales are trickling in. Sales forecasting allows you to estimate your revenue for different times during the year. In quiet periods, you can opt for cost-effective guerrilla marketing. When sales and revenues are on the rise, you can launch more targeted, but more expensive, marketing campaigns.
3. Accurate Budgeting
Accurate demand forecasting is a prerequisite for accurate budgeting. Using sales forecasting, you need to create a master budget, as well as budgets for overhead, cash flow, production, labor, and marketing. If you can create a flexible budget, you can shift certain efforts based on quiet or busy sales periods.
4. More effective workforce planning
Use forecasting to determine staffing needs at different times of the year. Increase or decrease staff according to customer demand in a given period. Knowing this in advance will help you recruit any additional or seasonal employees early enough to train them so that they are ready for you during busy periods. Knowing customer demand helps you determine when it is profitable to add another shift or expand production capacity. With demand forecasting, you can predict your workforce needs, create a better org chart, and proactively hire.
5. More insight into the operating result
Tracking overall bottom line is critical to improving your business. With sales forecasting you can compare to what extent the actual sales are in line with the expected sales. Determine how big the gap is between the forecast of demand and the actual demand, and adjust your business model accordingly. Demand forecasting helps you plan and track your bottom line.
Apply Demand Forecasting?
Data is essential for the demand forecasting process. Using machine learning makes predicting customer demand accurate. However, you must be able to rule out that there is a delay in your data. When you decide to store your data in a Dataplace datacenter, you benefit from a maximum connectivity so you are assured of accurate forecasts.
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