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Demand Forecasting: The Ultimate Secret for Your Organization’s Success

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“I am like any other man. All I do is supply a demand.” – Al Capone.

Al Capone understood that the secret to making money was simply giving people what they wanted. That’s it. Demand Forecasting is all about that one simple thing—figuring out what your customers want so that you will have products in place to fulfill their demands—the right products in the right place at the right time. It’s the key to overcoming challenges and feeling empowered in your business decisions.
For Capone, this task was made easy by Prohibition, which eliminated an end-to-end supply chain: the legitimate producers, wholesale distributors, and retail sellers of alcohol. They all went away, creating a large scarcity of products. There was a severe supply void for the end consumer’s demand, one that Capone’s organization was more than happy to fill.
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How to Avoid Carrying Cost Mistakes in Inventory Optimization

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Inventory optimization has two significant components: acquisition cost and carrying cost. If either of these factors is inaccurate, you could be leaving money on the table. An accurate carrying cost calculation can be the difference between a highly profitable inventory optimization program and one that forces you to close your doors.

Carrying Cost Mistakes: Inventory Optimization Killers

So, you’ve implemented a highly successful PO tracking program, and you know your acquisition cost for each product and location down to the cent (kudos if you’ve read our blog on acquisition cost). Now what?
While many top retailers (or grocers or wholesalers) may include many factors in their carrying cost calculations, we’ve found that most businesses overly simplify their projections, losing valuable margins. We’ve also found out that calculations often leave out real-world restrictions, including:

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Why is Last Year’s Seasonal Index Not Applicable Now?

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Is Your Demand Forecasting Solution Leading to Profits?

A seasonal index, or seasonal multiplier, is a figure that is used to adjust a demand forecast. It either raises it or lowers the forecast for a period of time. The result of the calculation (product base forecast x seasonal index) can be used to determine the inventory needed to support sales during that time. A holiday like Memorial Day, a season like spring, or an event like the Super Bowl is often better serviced by applying a seasonal index across the year.
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Quick 3min Video Results to Demand Forecasting VS Sales Forecasting for Inventory Replenishment

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We know millennials along with the rest of us learn better watching a video. YouTube and others have littered the internet with misinformation they call demand forecasting. Because the software says demand forecasting doesn’t mean it is demand forecasting, ha – obvious, right? Did you know there are differences in demand forecasting and sales forecasting? Google ‘Demand Forecasting videos’ and the top results are all using sales forecasting methodology, Not Demand. The inventory results caused by people using sales forecasting are costing companies millions of dollars. If demand forecasting and sales forecasting for inventory replenishment are the same, why use two different words: demand and sales? Most forecast videos talk about forecasting techniques and at some level forecast algorithms. The truth is the forecast algorithms for demand forecasting and sales forecasting can be the same. The key difference between demand and sales forecasting is the data being used in those algorithms.
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Data Profits’ New Video Shows the Difference: Demand Forecasting vs Sales Forecasting for Inventory Replenishment in Retail and Wholesale

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ATLANTA, April 27, 2017 – The Data Profits Team has noticed the most Frequent Question we receive is “What is The Difference Between Demand Forecasting and Sales Forecasting?” In fact, our most-read blog of all time deals with this subject. Even though this blog post is over 5 years old, it still attracts thousands of users to our website www.data-profits.com each month.

Data Profits’ goal is to educate our customers and readers/viewers of our blogs, SlideShare presentations, and YouTube videos.

Data Profits’ Video: “See Differences Between Demand Forecasting and Sales Forecasting for Inventory Replenishment”

We realize that millennials and others learn better by watching a video rather than reading a blog. Therefore, we introduced a new video that helps explain the Difference Between Demand Forecasting and Sales Forecasting. Click Here to watch our new video. Even if you feel you know Difference Between Demand Forecasting and Sales Forecasting, you may pick up a few tips for educating others.

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See Differences Between Demand Forecasting and Sales Forecasting for Inventory Replenishment

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Demand Forecasting software will measure and account for Lost Sales, overstock and closeouts. These are three pitfalls of not having a demand forecasting software solution. Sales forecasting methods doom you to repeat last years sales. Without real Demand Forecasting, tracking lost sales is only a KPI.

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Forecasting for Slow and Intermittent Products – the Fiction

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Is Your Demand Forecasting Solution Actually Leading to Profits?

All retailers face the fact that demand forecasting products that move slowly and products that move intermittently during the year is required to grow profits. In fact, 35-40% of most retailer assortments consist of slow and intermittent products. While this may be well known, it is less known that demand forecasting and how the supply chain software uses the demand forecast are the keys to meeting your turn goals and maximizing your GMROI.
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The Internet of Things Is Bound To Make An Impact in Your Demand Forecasting

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There’s a lot of buzz surrounding the Internet of Things (IoT). With Nest Labs’ line of household-connected devices and Amazon’s new Dash Button for reordering groceries, customers are getting used to more and more connectedness in their day-to-day lives. Retailers, too, are trying out ways to be more connected to customers and connect disparate parts of their business operations by adding connectivity to everyday things. RFID chips in packaging can track inventory from source to customer, provide valuable data, and lower shrinkage. Digital signage and shelf tags save labor and reduce pricing errors. With all the new and exciting things that the Internet of Things can bring to retail, it’s shocking how most inventory planning and replenishment software is behind the times.

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6 Seasonal Index Mistakes You Don’t Want to Make

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We all know snow shovels aren’t going to sell in the summer, and beach towels will flop in December. Most of us can identify general seasonality and spot a wrong seasonal index by applying simple common sense. But do you frontload your key seasons or reduce orders because your Replenishment System doesn’t quite get the job done? You might be encountering common seasonality issues that cause retailers big headaches. The irony of seasonal index errors is that they are one of the few things where an Excel file can solve the problem; yes, shocking, we all thought Excel was a reporting tool.

The critical point is that a seasonal index is just a multiplier to run against the base forecast. Some software solutions will lose you with a discussion using words like multiplicative and additive. While the debate has merit, these terms only describe seasonality math, not how it needs to be applied in replenishment or even what numbers are required for the seasonal index math. A seasonal index is multiplicative, and a market force is an additive against the base forecast, but I have gotten ahead of myself.
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Is your Demand Forecasting Ready for the Year of the Monkey?– 3 Things to Check

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Chinese New Year: Its Coming, Is Your Supply Chain Ready?

Chinese New Year starts on February 8, 2016. Most retailers are familiar with Chinese New Year because every year their Chinese suppliers and factories shut down for a few weeks. Chinese New Year is a huge celebration for China and many surrounding countries. Workers head home for a much deserved vacation that can last 4 weeks or more, leaving quiet offices and empty factories. That means nothing is shipping and that can result in empty shelves or managing the cost of overstocks- if your Inventory Replenishment software bought the right products.
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