Increasing forecast accuracy is the ultimate goal of every demand planner. The reason is simple—the more accurate your forecasts, the less time and money you waste by having too much (or not enough) inventory in stock. Furthermore, formalizing a forecast review process with appropriate stakeholders will not only increase forecast accuracy, but it will also initiate demand-shaping strategies to better balance supply and demand.
Introduce Product Segmentation
Products have varying degrees of “forecastability.” Therefore, it is essential for planners and buyers to segment products in order to focus their efforts on high-impact items.
Achieve Continuous, Just-in-Time Procurement
When applied to current inventory statistics, an item’s forecast allows the system to project when on-hand inventory will dip into safety thresholds. Tecsys’ demand planning solution can then apply a lead time offset to the purchase order or work order, effectively preserving safety thresholds. Removing lead time inventory from safety thresholds releases monies tied up in inventory, which may then be used to finance strategic growth initiatives.
5 Steps to Achieving Higher Performance with Demand Planning
Demand planning is the cornerstone of a supply chain that can meet customer demands while supporting growth opportunities. In fact, Gartner has stated that measurable successes from more accurate demand forecasting can include 15% reductions in inventory as well as improvements in fill rates, revenue, and gross margins.