How to Increase Your Supply Chain Income?

Demand Forecasting: How to Increase Your Supply Chain Income?

Posted on:
Apr 22, 2022

A successful business is unlikely without studying your audience. When demand forecasting steps into the game, it allows retailers to meet their customers’ needs.

Why use demand forecasting in logistics?

Demand forecasting is a highly efficient tool for any business type. When it comes to supply chain and logistics, analyzing customers’ preferences can set the tone for your transportation volumes and sales growth. So, what are the most significant advantages of demand forecasting in logistics?

  • Stock issues avoidance. Being well-aware of the market demand, you’ll upgrade inventory management and escape stock issues. Retailers who don’t practice demand forecasting are more prone to experience over- and understocking, which inevitably leads to money losses.
  • Accurate supply volumes and budgeting. The forecasting results shape your supply ordering, so you plan your budget better and don’t overpay for items your customers are not likely to buy. You can invest saved costs into more wanted products or launch a new line.
  • Personalization of customer experience. According to statistics, about 80% of customers prioritize personalized service when purchasing. You’ll get to know your target audience better and tailor your product offers to meet its needs by demand forecasting.

How to implement demand forecasting in your supply chain?

The demand predicting execution can seem challenging due to its complexity. Often, retailers seek to get quick results, thus overlooking essential parts of the process. If you want to get into the details of your target audience’s preferences, try splitting your main task into smaller ones to generate a step-by-step demand forecasting structure.

Determine the forecasting goal

Forecasting operations typically aim to examine and evaluate customers’ purchasing patterns and habits. However, your goals may vary depending on the business specifics and potentially problematic areas of your strategy. Besides learning about the customers’ tastes, you may want to find other factors that impact the buyers’ choices. For instance, if you’re a successful eCommerce retailer, you may want to know how to draw more customers by boosting your website. Or, you possibly want to figure out why your product isn’t relevant for all age categories of buyers.

Figuring out your goals determines the research timeframe and methods you’d use to gather and analyze information. The quantitative method relies on already existing sales data and previous demand tests. By delving into earlier financial reports and exploring how the purchase dynamics have changed over time, you’ll be able to foresee future demand fluctuations. If launching a qualitative forecasting method, it’s vital to assess the market updates that influence the popularity of your product (i. e. the change in prices or technological advances).

Collect the data

To make your demand forecasting fruitful, try to collect sufficient information. It’s essential to track your customers’ likes and what prevents them from purchasing. It will help you improve your product line to the extent that most buyers would appreciate. You can delve into promotion methods and platforms that bring your business the most attention and encourage purchasing.

If you want your forecast to be complete, consider using different channels to browse and collect data. Since both internal and external factors affect customer demand, it is reasonable to research analytics from inside and outside of your company. Consult your sales employees or review the financial reports to get valuable insights into buyers’ purchasing behavior. The data from external sources can be collected through customer surveys or investigating the market.

Analyze received data

After collecting the necessary data, you’ll see a clear picture of the products to bet on in the future. Besides, you’ll learn what components of your goods can make your customers regular. Maybe, they value the high-quality product packaging? Or perhaps, they’re attracted to your affordable pricing? Are they satisfied with your customer support service? In the end, do you manage to deliver your items undamaged and on time? Demand forecasting analysis will provide answers to many questions so that you can streamline the entire supply chain.

Use the results for improvements

Now that you have conducted the big data analysis, it’s time to identify the best way to benefit from your results. Ideally, you have to spot the differences between customers’ reactions to your products. It will suggest what items are more beneficial for your income and what ones you can rebrand, replace, or remove. Contact your supplier to share the insights and discuss what product adjustments you can make together. Besides, you may want to work on improving your website experience to make online purchases more appealing to your target audience.

The forecasting outcomes also show how the customer demand varies during different seasons. It gives you a clue to adjust logistics operations accordingly and practice early shipment planning. For instance, if you know the buyers will be ordering a particular product at a specific time, you can optimize the supply chain to ship the items with no delays and interruptions later. Given the benefit of additional time for preparation, you’ll have better and cheaper choices of shipping services. GoShip is a perfect online platform for managing your early bookings and comparing shipping rates. Try our interactive free quote tool to see the real-time transportation prices and connect with many professional carriers.

Written by: