Supply Chain Management Forecasting & Why You Need It!

We live in a fast-paced world of same-day deliveries, and this requires an extensive, accurate process. It’s made possible through supply chain management, a critical process that ensures a smooth transition of a product and service from procurement of raw materials to delivery. To help companies cut costs and deliver better, forecasting in supply chain management has become essential.

Supply chain management has changed over time from being linear and siloed to more flexible and transparent. The first step of supply chain management is planning and that’s where forecasting plays an important role. Forecasting helps you predict demand and inventory, streamline communication across the board, and more.

Importance of supply chain forecasting

A just-in-time (JIT) supply chain is needed to enhance customer service and reduce inventory-related costs. However, forecasting is key in maintaining accurate supply chain management. Forecasting relies on understanding the competition, analyzing past and present sales data, and collecting supplier data to predict future demand.

This data-driven analysis helps businesses predict their performance and identify potential issues in the supply chain. Supply chain management forecasting software considers seasonality and changing trends to help you predict demand based on patterns. In turn, predicting demand and inventory lets you control shipping and reduce lead times, ensuring timely deliveries and increasing customer satisfaction.

From efficient procurement to delivery, forecasting helps you at every step in maintaining inventory while cutting down on unnecessary costs, minimizing waste, avoiding overstock, and keeping only necessary safety stock.

Components of forecasting in supply chain management

Forecasting can never be 100% accurate, but with better analysis and better techniques, you can increase its accuracy. An ideal way to ensure higher accuracy in your forecasts is by using a blend of quantitative and qualitative forecasting methods. As mentioned below, certain forecasting components can be detrimental in affecting your forecast accuracy.

• Historical data helps you understand the market’s response to your products over time.

• Seasonality and trend analysis enable you to understand buyer behavior, an essential factor influencing demand.

• Lead time analysis for purchasing, manufacturing, and shipping is crucial in avoiding delivery delays.

• ‘What if’ analysis uses various values of demand and availability to tell you how prepared you are to cater to future demand.

• Competitor analysis and market research inputs let you understand the market conditions.

• Regulation changes, both pre-planned & sudden, can change your operations models.

• Pricing changes can affect both your demand and forecast.

Types of forecasting in supply chain management

When we mention forecasting, most people often only consider demand forecasting. For efficient supply chain management, just demand forecasting software isn’t enough. The following types of forecasting are used to ensure the best supply chain management.

• Demand forecasting

Demand forecasting uses past sales data, statistical data, business information, and trend analysis to predict the future demand for your products. Using the forecast, you can plan your production and inventory for the coming periods.

• Sales forecasting

Sales forecasting lets you predict the future sales of your products. It allows you to monitor product performance, estimate revenue, and make productive decisions to enhance sales in the coming time.

• Inventory forecasting

Inventory forecasting lets you optimize your inventory to avoid overstock and stockouts. You can prevent unnecessary costs often caused by inventory waste or deadstock.

Supply chain planning for business

Supply chain planning is the process of using strategies to equalize your product supply and predicted consumer demand. These strategies include forecasting, inventory management, and more. Complete supply chain planning ensures optimal inventory to be ready to cater to demand while also avoiding overstocking.

The supply chain planning process can be divided into strategic, tactical, and operational planning.

Strategic planning focuses on long-term decision-making. It lays the foundation for the supply chain of the business. Issues like determining the locations of manufacturing or suppliers are considered at this level.

Tactical planning breaks down the strategic plan into smaller operations to maximize efficiency. This can include determining suppliers and safety stock.

Operational planning includes minor daily & weekly tasks that add up to the tactical planning goals. These can include taking customer orders, making a production schedule, etc.

The perfect forecasting software for your supply chain

Finding the right forecasting software for supply chain management can seem like a hard task. After all, not all software can cater to the specific needs of your business. If you’re looking for the perfect supply chain forecasting solution for your business, TransImpact has the industry-leading answer for you.

Our software suite provides you with accurate forecasts using more than 250 forecasting algorithms. You can generate forecasts for up to 5 years in the future with up to 99% accuracy.

Don’t let inventory woes get the best of you. Get in touch with us and let’s get started.