Demand planning and forecasting are essential parts of any business. When you run any business, it is mandatory to get an idea about demand of the product you produce and its exact forecasting depends upon the various internal and external factors. This is a continuous process. Therefore to run a business successfully, we need exact demand planning strategies and its forecasting. Here we are going to tell you some of the ways which can help you in better demand planning and forecasting.
Every Business is Different- One must understand that no two businesses are same, even if they produce the same product. There are certain conditions which differ from the other. This applies to two units of the same business as well. So to understand the demand, we must plan accordingly so that we can forecast the demand. Demand has to be forecasted both for long and short term. No business can survive with any rigid or stereotype approach of demand forecasting.
What Drives Improbability? – There are various factors which can lead to no decision situation in any business. The businesses must identify such factors and try to sort out the issues. There are factors as well which are necessary to understand for apt demand planning and forecasting.
Such as –
- Is the demand regular?
- What are the factors that affect demand?
- Whether the existing resources are honest and dedicated?
- Do you have alternative resources?
Do Not Make Rigid Approach – Sometimes businesses try to follow rocket science approach for demand planning and forecasting. These approaches should be simple and easily understandable. Business models should follow simple and already defined approaches rather than following their own strategies-
Some common forecasting methods are –
- Consensus method – the holiest approach
- Regression method- not successful all the time as takes into accounts the older results.
- Heuristic approach relies on the expertise of the business heads.
- The time series method takes into account the historic data.
Accept Change- Many businesses fail to proceed and achieve new horizons as they are rigid in nature. They are not ready to accept the changes occurring around the globe which directly as well as indirectly affect the business model. For better demand planning, understanding the core competencies is a must. Businesses should keep in mind the following things before demand planning and forecasting strategies-
- Check whether the training module is as per latest norms.
- Make sure that you have the right mix of expertise and fresh ideas.
- You should have clear and well defined methods of forecasting so that demand planning goes on the right track.
Accept the Facts- No one can predict the future. You can only plan according to the resources available with you. You should always have backup plans to implement in the crucial conditions. Your planning should always be well ahead of time. You should always be well prepared to accept and expect the unexpected to happen.
Above mentioned steps for better demand planning and forecasting will not only help you better understanding the ever-changing demand but help in better utilization of available resources as well.