While it is nearly impossible to pinpoint the how's & why's of a market's future state, organizations can predict the relevancy of their offerings to their consumer base with the help of Demand Forecasting. On the back of a company's working relevant data, a demand forecasting software analyses the inputs and comes up with possible scenarios & simulations, helping a company make better decisions and stay on course with a revenue-contributing impact.
What are the types of Demand Forecasting?
Every company charts its way ahead for the foreseeable future based on its relevant data. Out of the various available types of forecasting, an organization finalizes its demand forecasting model on the parameter of scale, market presence, workforce & resources.
- Passive Demand ForecastingA straightforward way of analytics helping an organization, Passive Demand Forecasting uses historical data to project sales in the future. The process has more chances of making an impact if the data accounted for analytics is of the same season. It’s also one of the most easily applicable ways, as it doesn’t require any customized statistical modeling or cognizance of current economic trends to implement it.
- Active Demand ForecastingActive Demand Forecasting comes into the scheme of things for companies in the starting phase of their operations. Being an aggressive analytical approach, it accounts for thorough expansion through marketing campaigns and new product launches inclusive of exhaustive research. For enterprises with a clear focus on rapid growth, active demand forecasting is the way to venture ahead.
- Short-term Demand ForecastingAs the name suggests, short-term demand forecasting focuses on the timeframe of the next 3 to 12 months. A helpful procedure for just-in-time (JIT) supply chain scenarios, this forecasting process aids a company in becoming adaptable due to frequent demand surges (for instance, during a flash sale event). In more extensive planning, the short-term forecast works well with long-term planning.
- Long-term Demand ForecastingThis forecasting plan shapes your organization's growth and accounts for durations exceeding a year. While many key performing metrics are derived from analytics, it is also designed keeping in mind a company's time ahead involving capital, expansion proposals, and the prospect of scaling up supply chain operations. It is essentially a roadmap building up to a company's eventual targets.
- External Demand ForecastingA forecasting plan taking account of the external disruption factors from economic challenges and competition to consumer trends – this process focuses more on the stability of a company during turbulent times than expansion. This further gets divided into two categories: Micro & Macro Demand Forecasting. While the macro is essentially forecasting based on the aforementioned external factors, micro forecasting further narrows it down to a specific industry or a user base.
- Internal Business Demand ForecastingIf a company plans to achieve its targets, it first requires internal business demand forecasting to gauge its operational potential. This titular action makes a think tank aware of the shortcoming in its supply chain structure and aids in setting realistic projections. This proves to be instrumental in bringing fore the limitations of an organization and giving them the space to build on it to meet demand forecasting for new products.
With the above types of forecasting processes assisting businesses to gauge consumer requirements in context to market opportunities & challenges, the crux remains that its key success parameter is defined when companies attain the perfect balance of supply & demand under its parameters of the workforce, assets, resources & capital.
At 3SC, our demand forecasting software factors in the market risks and their impact on a business workflow to develop accurate insight to help your organization build optimized end-to-end supply chain solutions. Our supply chain platform leverages advanced data analytics and AI & ML to sideline any potential aberrations and keeps you on track with revenue generation.