Forecasting in Supply Chain Management: Best Practices for Anticipating and Responding to Changes in Demand

Forecasting in supply chain management is constantly evolving, requiring that you anticipate and react to demand changes with more speed and accuracy than ever before. Ecommerce and social media are spurring a demand-driven customer base that can require you to produce ever-evolving product innovations, new features and up your efforts to capitalize on brand loyalty.

Aggressive Demand Forecasting in Supply Chain Management Isn’t Just a Luxury

Getting aggressive toward demand forecasting in your supply chain is a requirement. One best practice for anticipating changes in demand is to avoid the “emergency” plan for demand flux, and instead, weave your demand forecasting and reaction strategy into your core business plans across all divisions. Consider yourself one owner of your brand, even if your supply partners and raw materials manufacturers are a mix of third-party entities and global suppliers. By considering yourself in an ownership role of your total brand, your leadership will naturally keep customer service in their immediate dashboard.

Invest in Visibility Across Partners for Forecasting in Supply Chain Management

Invest in top-level visibility, even if you are outsourcing more areas of your production line – and this visibility must occur in real-time if you are to successfully accomplish forecasting in supply chain management. The challenge is quite real. According to AMR research, nearly 70 percent of organizations who describe themselves as brand owners said in a study that their level of control over supply chain elements like order management, risk management and forecasting has been reduced. One way to regain supply chain demand forecasting control is to be sure your employees, your supply partners and your buyers have optimum visibility into your supply chain, This process has been simplified by new mobile technology, such as Oracle and SAP innovations.

You Can’t Do It All: A Philosophy for Forecasting in Supply Chain Management

Focusing your attention on key partnerships with top supply chain partners is another practice for improving your forecasting in supply chain management and your ability to react to demand fluctuations. This means you may create what some describe as an “ecosystem” effect. In this philosophy, core supply chain entities are increasingly reliant on one another – yet they can also reap higher rewards from this interdependence. To be successful in this philosophy, you’ll need to ensure scorecards are shared and created collaboratively, and that your overall supply chain outcomes are also in agreement.

Don’t Stop With One Practice for Forecasting in Supply Chain Management

Forecasting in supply chain management and reacting to demand changes requires concentrating on not just one practice of forecasts, such as those based on outsourcing. This prevents you from reacting to demand information that’s based only on information coming from a single department or single incident before the complete demand picture can be viewed. Enterprise resource planning (ERP) packages are one solution for diversifying the information sources you use to make demand forecasting decisions across your supply chain. ERP systems are also designed to help you create your demand reaction strategy in a proactive way, pulling in elements such as accounting, customer relationship information and inventory data into your decision plans before the need arises.

Forecasting in Supply Chain Management Means Power to Your People

One chief area of difficulty of forecasting in supply chain management lies in the realities of unannounced large orders, unexpected supply changes and other demand changes that can’t be handled by automation. Human insight among your leadership team is a key ingredient, and this hinges upon your leadership having ultra-quick, real-time data tools that let them explore scenarios before action is taken. Give your people the tech tools to try out scenarios with global-based visibility, but don’t overlook the need for insightful, talented leaders who can handle demand reactions without losing sight of your organization’s strategic goals. This may require that you enhance a legacy supply chain data system with new tools for alerts, or that you merge legacy systems and new Web-based applications for supply chain management.

Forecasting and reacting to demand changes across your supply chain requires visibility, collaboration, excellent communication and technology combined with human leadership skill. In other words, you can’t do it alone – but you certainly flourish in a demand-driven environment by creating the right mix of these elements.

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