Demand forecasting refers to the process of making estimation of the demand for your product or services in the future. This demand forecasting uses predictive analysis of historical sales data to forecast what customers will want in the future.
Demand is what drives a business. So, a thorough understanding of demand is needed to make right decisions about finance, company expansion, staffing and more.
Demand forecasting helps organizations make decisions that predict future sales and revenue over a period of time, as well as helps them determine what new offerings will evoke interest among customers. Predicting what customers want and in what quantity is not as easy as one might think.
There are solutions you can use to improve operational efficiencies, save money, improve production and provide a better experience to customers.
Why is demand forecasting important for organizations?
Demand forecasting is important, particularly for manufacturing businesses, because identifying demand for your product or services means you can better prepare. Forecast accuracy don’t need to be perfect. Knowing the level of demand accuracy gives you time to plan and prepare.
Effectiveness of demand forecasting is reflected in inventory management. You can overcome most of the inventory problems you face and maintain a proper inventory balance with good demand forecasts. Efficient inventory management will not leave your customers dissatisfied and lose future business.
In the challenging landscape, demand forecasting is important for growing small and medium businesses. A faulty demand forecast can leave the company unprepared to fill a large order. So, it is vital to have an advanced demand forecasting solution like the one offered in Dynamics 365 Supply Chain Management.
What are the benefits of demand forecasting?
Enhanced supply chain efficiency
Operations management is one area where demand forecasting is useful. If you can forecast the quantity of sales, you can better schedule your manufacturing, warehousing and shipping. When you are informed about an increase in the demand, you can contact your suppliers to ensure enough materials for the smooth running of manufacturing.
Better inventory management
The advantage of Microsoft Dynamics 365 is that it provides real-time data for enhanced forecasting accuracy. Real-time data eliminates supply and demand mismatches which leads to optimized inventory levels. Demand forecasting helps you avoid stock-outs that results in unfulfilled customers. It is also helpful in determining the amount of stock to be kept. With good demand forecasts, you can make accurate inventory decisions which helps to better position the stock in warehouses and stores.
Manage cash flow
Good demand forecasts helps you better handle your cash flow, ensuring enough money on hand. You can avoid the risk of paying vendors or suppliers on time. By efficiently managing your cash flow, you can meet customers demand for your products or services prompt. This strengthen your brand image and increase customer satisfaction.
Business strategy
You can allocate adequate resources and make sales and revenue projections with proper demand forecasts. If you expect good demand for your particular product, you can increase the level of production to meet the increased demand. This helps you improve your business strategy. Demand forecasting helps you eliminate risks and make better financial decisions that maximize revenue, cash flow, and create more growth opportunities.
Demand forecasting requires your historical data to be managed in a proper manner and it implies how customer’s data is collected and stored. Using solutions like Dynamics 365, organizations can ensure data accuracy and could be used for forecasting purposes. Moreover, the solution allows various departments to access and share data. This ensures operations (supply chain), sales and other departments have use data that is relevant to them.
Demand forecasting in Supply Chain management
By using demand forecasting in Microsoft Dynamics 365 Supply Chain Management, you can forecast independent demand (request of customers for finished products) and dependent demand (demand for parts or raw materials to produce finished goods) for customer orders. The tool uses historical transactional data for forecasting.
Key features
- Generate forecast that is based on historical data
- Leverages a group of forecast dimensions
- Visualize confidence intervals, adjusted forecast and demand trends
- Use the adjusted forecast in planning process
- Eliminate outliers in data
Demand forecasting which is built into D365 help organizations to capture historical data to build a forecast using a set of algorithms. Output can be customized, updated and authorized for use.
D365 gather transactional historical data from the database to form a staging table. This staging table is fed to a machine learning service. You can then make some customization and connect to various data sources like Microsoft Excel files, CSV files and different Dynamics systems. So, you can generate demand forecast from historical data that is spread across different systems. Machine learning-driven demand forecasting improves your forecasting baseline accuracy. You can visualize the baseline forecast in Supply Chain Management. D365 SCM calculate different types of forecast accuracy to generate the predictions.
When you intend to create good demand forecasts to improve sales, supply, manage inventory, make financial decisions, allocation of resources, reduce operational costs and control overall spending with the leading supply chain software, get the help from reliable Microsoft Dynamics 365 partners.
If you have business across Middle East, Asian or African Countries, ensure you partner with the experienced and reliable Microsoft Dynamics 365 Partners in UAE, Saudi Arabia, Oman, Qatar, Bahrain, Kenya, Germany, Canada, Pakistan, and India to get the solution deployed.