Demand Sensing – The Next Generation of Demand Forecasting?
As channels, markets and consumer segments become more complex and fast-changing, companies are increasingly challenged to produce inventory forecasts and demand plans that get the right inventory to the correct location at the right time.
Forecast accuracy for many consumer products and retail companies today is extremely low, with many reporting error rates as high as 50%. So when you bet on the outcome of a coin toss you’ll be right half the time, so it’s no wonder that businesses and E-commerce companies are desperately looking for better and more reliable inventory forecasting methods.
Companies using demand-driven planning and demand sensing can detect market changes at least five times faster and respond three times quicker than those employing traditional inventory forecasting methods. According to a recent report sixty-one per cent of best-in-class consumer products and retail companies cite demand-driven planning and demand sensing as a game-changing capability, while 85% believe this capability is growing in importance.
Businesses using demand-driven planning and demand sensing become much more closely linked to the market and pull driven. They can position inventory accurately, react swiftly to real consumption levels and underpin the success of their strategy by improving the accuracy of near-term forecasts.
Demand-driven planning and demand sensing also enhances companies’ ability to shape demand. From a marketing perspective, they can better compare the return on investment of different proposed activities because they can segregate baseline demand from the way demand behaves during promotions and events. They have a much clearer picture of which outcomes are due to different facets of a promotion (10% off or 20% off; front aisle or centre store; TV advertising or social media campaign) and which are due to extraneous factors (rival offers; weather conditions).
From a supply perspective, demand-driven planning and demand sensing means that when companies have too much inventory, they can proactively push the market to reduce stock, and when they are low, they can remove promotions to avoid creating false expectations and disappointing customers.
So it is time that you look at demand-driven planning and demand sensing for your business! Learn more about Intuendi.