Achieve Your Target with Demand Forecasting Methods
It is very important to accurately forecast the demand of the products to be produced in order to plan the capacity and inventory requirement. In the process of predicting how much goods or services consumers will demand in the future, demand forecasting methods . So, how is demand forecast done? Demand forecasting methods How is the process carried out? Let's examine it together.
What is Demand Forecast?
Demand forecast is the most accurate forecast of future demand for any product or service. demand forecasting Although has been accomplished successfully, it may not always be accurate. In order to make the result more accurate, it may be logical to base on clustered units instead of a single unit, ie a single product range. Thus, on average, the result is more approached. The margin of error is higher if the demand estimation is made well before the product will be available for sale. The margin of error decreases as the time of sale approaches. Demand forecast ; can use techniques such as statistical estimation and artificial intelligence assisted estimation.
Statistical Estimation: Algorithmic estimation performed by collecting various data and calculating them mathematically is called objective estimation. In this estimation method, skilled software tries to find the approach that will yield the lowest error margin for each product separately by using many algorithms in them. The impact of factors such as product lifecycle, seasonality, promotion and the behavioral influence of competitors are often described by the planner to the software. Past actions outside of the general trend called Outlier are classified or ignored within the framework of the rules defined by the planners or the suggestions of the software. While the result of statistical estimation made especially in a period close to the time of sale may have less margin of error, support can be obtained from artificial intelligence for long-term forecasting.
Artificial Intelligence Assisted Forecasting: Predicting the future with the statistical analysis of the company's historical sales figures is not always accurate. Because this approach has difficulty in considering the influence of external factors. However, many macro and micro economic factors such as weather conditions, cross rates, consumer confidence index, oil prices will also affect sales. Machine learning capability brought by artificial intelligence dissolves the links between past sales and numerous external factors. It tries to better predict future sales with the pattern it learns from these connections. It offers more accuracy than pure statistical methods for the long term.
What Does a Demand Planning Specialist Do?
Demand planning specialist provides sales forecasting by following the history and future plans of sales and marketing activities.