Running a business can be an extremely complicated endeavor. As an owner or a manager, you have to worry about hundreds of moving parts and make sure they are all in sync in order for your business to work perfectly. This includes everything from managing your teams, customers, suppliers etc. Now imagine if on top of all this you had to guess at the end of every sales cycle as to how much inventory are you going to need for the next cycle?
Seems impossible right? Believe it or not, many businesses around the world are playing this dangerous game where they just order inventory based on guesses and usually end up with a lot of unsold inventory, which eats into their profit and ultimately results in unnecessary losses.
This is where demand forecasting comes in!
What is Demand Forecasting?
Demand forecasting refers to the process of making estimations about the future demand of a particular product by your designated customer base over a definite period of time. In most cases, demand forecasting is done using historical data from previous sales cycles and other crucial data such as customer shopping habits.
Why is Demand Forecasting Important?
There are a number of reasons why demand forecasting should be a necessity for every owner or a manager running a small, medium or large sized business.
Demand Forecasting allows businesses to effectively plan for their fiscal years. A rough estimate of their future sales allows them to not only set aside an inventory budget but also plan accordingly for expansions, new business creation and their goal setting.
Better Inventory Management
An accurate demand forecasting can help a business manage their inventory in a better way. Knowing the future sales number not only allows the business to order the inventory as required but also saves the costs that would have been spent otherwise on returns or damaged inventory.
Streamline your Sales Pipeline
Based on the historical data, demand forecasting can also help you identify any hiccups that might be coming up in your sales pipeline and can prepare you to deal with them in a better way. In the case any such incident occurs, you will not only be better prepared but will have a counter plan to ensure the smooth flow of your sales pipeline.
Demand Forecasting also helps you identify what areas of your business needs more resources to be allocated whether it is in the form of expenses or human resources. For example, you will know exactly at what times during the year you would require extra human resource so you could plan accordingly and run your operations smoothly during your peak hours.
If you are in the market and looking for a demand-forecasting tool, look no further. We at Thrive Technologies bring you the perfect demand forecasting solution to meet all your needs. Our smart demand forecasting software makes the use of multiple forecast models to provide you with every scenario and help you plan accordingly.