Demand forecasting is an essential aspect of any business planning process. Accurately predicting demand levels helps businesses make informed decisions about procurement, inventory management, pricing, and other key areas of business operations. Although demand forecasting is a beneficial tool for businesses to use, it can be particularly challenging to accurately forecast demand in uncertain times.
In this blog post, we’ll explore the challenges of demand forecasting and outline how our solution navigates these challenges successfully.
Inflation and Its Impact on Demand Forecasting
Inflation is the rate at which the general level of prices for goods and services is rising; it can significantly impact consumer behavior and demand levels. Inflation erodes purchasing power, making it more expensive for consumers to buy goods and services, which can lead to a decrease in demand. To account for inflation when forecasting demand, businesses can adjust their forecasts by factoring in expected inflation rates and estimating how they will impact consumer behavior. For instance, if inflation rate is expected to increase, the forecasted demand is decreased to account for a probable decrease in goods sold.
How do we account for inflation when forecasting demand?
Blue Sky’s Demand Forecast service operates with our own forecast AI that considers inflation as a factor among many during calculations. As a result, the predictions provided by our Demand Forecasting solution already incorporate the impact of inflation rates.
Hard-to-forecast Products and Demand Forecasting
Some products are more challenging to forecast demand for than others, such as those with highly unpredictable consumer behavior or seasonal demand patterns. For instance, paving stones might experience high demand during certain seasons or based on regional weather conditions.
How do we forecast items with erratic or missing history?
To forecast demand accurately for hard-to-forecast products, our solution uses multiple analytical approaches to identify best-fitting demand curves for items that have erratic or no history based on similar items as reflected in relevant characteristic data available.
Conclusion
Demand forecasting is essential for any business planning process but can be particularly challenging in uncertain times. Our solution is built with these challenges in mind and makes it easy for businesses to accurately predict their demand even under the most uncertain conditions.
Are you interested how our Demand Forecasting solution has helped business and can also help yours? Get in touch with us for a demo of our service.