Guide

Quick Guide to Probabilistic Forecasting

Probabilistic forecasting is the best foundation for right-sized inventory in uncertain times by providing greater insight into customer behavior for better stock positioning and improved service levels. Find out how probabilistic forecasting works, how it outperforms traditional forecasting methods, and how it could benefit your sustainability efforts, customer satisfaction, and bottom line.

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/ Why traditional forecasts don't cut it

“When all you have is a hammer, everything looks like a nail.”

The same idea applies to many companies’ forecasting methods. By slapping the same rigid algorithms onto every situation without accounting for external variables and location-specific product behavior, planners end up playing a game of whack-a-mole, attempting to compensate for the issues created and perpetuated by unreliable forecasts.

Other companies are encumbered by unwieldy spreadsheets that hamper data analysis, magnify errors, and do little to counter the effects of guesstimates and crossed fingers.

In today’s world of uncertainty, supply chains require forecasting methods that can handle mountains of data and adapt quickly to increased complexity, continued shortages, and unexpected disruptions.

That’s where probabilistic forecasting comes in.

AI-driven probabilistic forecasting combines external causal data with historical and demand-relevant internal data to provide planners with a more nuanced understanding of demand patterns. This allows businesses to make intelligent decisions quickly, calibrate their forecasts to achieve maximum accuracy, and ensure a consistent, positive customer experience.

3. Recalibrate (Rationalize) Your Product Portfolio

When COVID hit, manufacturers scrambled to meet demand, but there was a nasty surprise in store in the form of a radical shift in consumer buying patterns and behaviors. However, this demand shift presents a unique opportunity to rethink your product portfolio and rationalize it to ensure you’re focused on the more critical subsets. Here are some places to get started:

/ Ensure Your Supply Chain is Agile, Resilient and Flexible—No Matter What

Two inescapable facts: Your supply chain is mission-critical and the next disruption may be just around the corner. Preparation is crucial to protect your business and your customers, and don’t forget that planning ahead can also yield huge dividends.

Download our ebook for practical guidance for making your supply chain ready for anything.

Game On: A Planner’s Playbook for Rapid Response to Supply Chain Disruptions.

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