Demand Forecasting Software
If you want to make smart operational decisions, you need reliable demand forecasting software. But many companies find themselves dealing with unpredictable, intermittent demand. It’s nearly impossible to get the forecast accuracy required to manage supply chain demand planning properly. Translating your aggregated sales forecast into an operational supply chain forecast at the customer (Item-Location) level is difficult and time consuming. ToolsGroup’s demand forecasting software automatically models bottoms-up demand for individual products/SKUs in detail, going well beyond a standard one-number forecast. Ithttps://www.toolsgroup.com/blog/probabilistic-forecasting/ analyzes order-lines to model both historical demand quantities and demand frequency, resulting in a more accurate estimate of volatility. For example, it understands the difference between bulk ordering 20 units and selling single units of the same product 20 times. It also handles intermittent “long tail” demand for slower moving products whose forecasts are inherently more challenging. It understands factors that contribute to volatility, whether market (trends, seasonality, causal factors and lumpiness) or organizational (demand shaping promotions, new products, forecast bias and the bullwhip effect). Highly automated, the software draws on readily-available data. What does that mean? An end to inaccurate item-level forecasts and better supply chain demand planning.
Key benefits of supply chain demand planning
1. Low effort, high accuracy
Many demand planning software solutions consider highly intermittent demand unforecastable. Demand for “slow-movers” may be driving you to manage by exception. As the number of SKUs increases, this workaround is no longer feasible. When your single number demand forecasting software fails to consider the nuances of the demand for individual items, you inevitably are left with poor stocking levels.
The ideal is to reliably forecast intermittent demand with the minimum amount of effort. To reduce complexity and boost service levels, you must break through the forecast accuracy barrier to consider the entire range of possible demand (also known as probabilistic supply chain forecasting). This way, you still get one number that’s indicative of the expected outcome. But banded around that number you also have a range of alternative outcomes and their respective probabilities. This prepares you to consistently place better inventory bets than the competition for items with intermittent demand.
2. Greater efficiency and accuracy from machine learning
Creating forecasts shouldn’t require a whole week of number crunching, late hours and adjustment only to be left with a forecast that still misses the mark. On top of that, evaluating the forecast and capacity and placing production orders takes weeks.
An automated system supported by machine learning enables your planners to focus on more valuable tasks than tweaking forecasts. The system effortlessly monitors your forecast, inventory and orders to create a continuous feedback loop. This way you have the ability to forecast a wide array of items in your network (across multiple tiers) and achieve optimal inventory levels.
Demand forecasting software can reduce short-term forecast error by up to 30-50%, significantly lowering inventory levels and improving service levels.
Demand forecasting software keeps you ahead of surprises
ToolsGroup’s demand forecasting solution relies on an “outside-in” approach to supply chain demand planning, by tracking the demand signal from these data sources:
- The next downstream step in your demand chain, like warehouses or retail locations
- Further downstream, such as transactional or point of sale data, extending visibility to the rest of the supply chain
- Better “big data” input in Demand Signal Repositories (DSRs), including macroeconomic trends, data from social media, customer web behavior and sentiment
Demand planning software can help you rapidly identify sudden changes in customer demand using advanced statistical analytics, pre-empting replenishment problems. You’ll see numerous benefits:
- Daily forecasting minimizes latency and improves near-time replenishment
- Daily time buckets allow you to detect SKU-Location demand patterns, offering insight into major customers’ buying behaviors
- Upgrading basic rules-based formulas (for example 2 day back, 3 days forward smoothing) to more complex short-term forecasting consumption logic, enables improved insight into how demand is consumed at the Ship-To Location
- Improve supply chain visibility within your network (sell-out or current stock position data)
- Eliminates uncertainty and contributes to responsiveness, better predicting demand
The objective of market-driven demand forecasting software is to capture all influences on the demand signal, cancelling the noise and boosting forecast accuracy. The sooner you adopt improved planning approaches and tools, the sooner you’ll see the benefit in your demand forecasting results.