LONDON--(BUSINESS WIRE)--A well-known market intelligence company, Infiniti Research, has announced the completion of their latest article on demand forecasting in retail: critical mistakes to avoid. In this article, experts at Infiniti uncover some common mistakes that retailers make during demand forecasting and also explains how to avoid them.
Retailers rely on demand forecasting to support inventory planning and distribution functions across their sales channels. Accurate demand forecasting requires a clear understanding of the right data and the repercussions of incorrect demand estimations. If done correctly, demand forecasting techniques can help companies across the consumer goods spectrum to optimize operations and increase value while reducing additional costs.
Smart forecasting is a powerful tool in today’s increasingly competitive retail landscape. Request a free proposal to know how we help companies to make information-driven decisions that optimize revenue.
Demand forecasting mistakes in the retail industry
Ignoring store-level demand
Retailers sometimes build demand forecasting models using a top-down approach in order to speed up and simplify the forecasting process. However, not using an individual location-level unconstrained demand forecasting can result in significant under-prediction while estimating the actual demand. Furthermore, estimating demand forecasts solely against prior sales don’t account for events such as lost sales due to out-of-stocks, causing any forecasts for the future to be artificially depressed, and the cycle to continue.
Planning solely for distribution channels
Sometimes companies in the retail industry make the mistake of using demand planning solely to enhance their distribution channels. Retailers will be able to churn out more from their investment if they rely on the data to optimize the production process as well.
Getting the most out of your demand planning tool requires you to become familiar with its features and with several concepts related to inventory forecasting. Get in touch with our experts for more insights on everything you need to know about demand forecasting for your business.
Overlooking historical patterns
Unless a company has restructured its organization recently or altered their product or service lines significantly, there should be historical data that reflects distinguished demand and sales patterns. These patterns are the best sources to use for demand planning because while they don’t necessarily consider current changes or possible impacts to the supply chain, they give retailers a baseline against which they can build accurate numbers for demand forecasting.
Optimizing business processes too soon
This is especially true in the case of new businesses or a recently restructured organization. Businesses that tend to undertake demand forecasting based on a small dataset that ranges over a short period are more likely to end up with adverse results.
If you have experienced any of these common dilemmas in demand forecasting, we can help you take the guesswork out of forecasting and gain the kind of actionable intelligence that produces results. Request for more information.
About Infiniti Research
Established in 2003, Infiniti Research is a leading market intelligence company providing smart solutions to address your business challenges. Infiniti Research studies markets in more than 100 countries to help analyze competitive activity, see beyond market disruptions, and develop intelligent business strategies. To know more, visit: https://www.infinitiresearch.com/about-us