Article
How should businesses approach demand forecasting?
A few weeks ago, we published a series of LinkedIn polls to discover more about how organisations approached their demand forecasting. We’ve seen recent high-profile examples of accounting errors (and test and trace errors) caused by an over reliance on excel spreadsheets, and we’d also come across companies juggling a myriad of spreadsheets to create their forecast. We’d also come across some that did not forecast. But was this representative?
The Results
We won’t hail this as the most scientific study, but we did get over 300 respondents to our questions. We would like to think of it as a reasonable indicator at the very least!
The 3 polls were:
- Who is responsible for forecasting within your organisation?
- How reliable the forecasts you and your team work from?
- The software used for forecasting in your organisation
Who is responsible for forecasting within your organisation?
We discovered that a surprising percentage of supply chain leaders are not in control of generating forecasts in your organisation! Instead, sales and marketing and finance are responsible for over 30% of organisations. Forecasting is a key element in determining supply chain demands and our experts believe that this should predominantly be the responsibility of supply chain leaders in order to produce accurate, reliable results that the entire business can work from.
How reliable are the forecasts you and your team work from?
83% of organisations believe their forecasting is less than 85% accurate despite the capital this potentially ties up in the business, with 30% less than 50% accurate! This suggests to us that there is massive opportunity to release cash, improve delivery performance, manage potential capacity constraints and realise cost efficiencies across the whole supply chain.
What forecasting software is used within your organisation?
We were not entirely surprised to discover that 55% of organisations who participated are still using spreadsheets for their forecasting. While Spreadsheets are a very flexible tool for some experimental modelling, they are an unreliable and inconsistent platform and can jeopardise your customer experience. Inaccurate forecasting results will lead to excess stock, unnecessary capital tied up in the business and inefficient resourcing requirements.
Our team of inventory and forecasting consultants all have direct industry experience across a range of sectors including manufacturing and distribution.
We’ve developed a proven methodology to generate reliable and unbiased demand forecasts to inform replenishment activity and optimise inventory levels.
We can provide not only more accurate forecasts, but we’ll make clear and practical recommendations for improvements across your supply chain.
To find out more, get in touch forecasting@hatmill.com
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