The Art of Forecasting Demand
It was 2007, and Apple’s iPhone had first hit the market. An optimistic, and very brash, Steve Ballmer was asked about the future success of Apple’s smartphone. He said that not only was the device the most expensive on the market, its lack of keyboard doomed it to failure.
History is full of incredible blunders in forecasting because business intelligence isn’t always the most intelligent. There are many variables, yet there’s an art to business forecasting that continues to drive corporate thinking at a high level.
Much of the behind-the-scenes work is done by software for demand planning and other systems that manage every aspect of the supply chain. Businesses need that real-time edge to remain agile, no matter the size. With the right intelligence, these businesses have the tools they need to remain competitive.
Gather the Right Intelligence
Big Data is very useful, as long as you have the tools to crunch those numbers into meaningful reports. Sales is an excellent place to start for a company with at least a few years of operation history on the books. Past sales can provide insight into the stability of a product, and give those at the top a better concept of when a new product (or update) might make a difference in the market.
When you’re forecasting, gathering the right intelligence means looking for indicators of price or market response to a product launch. Are existing customers demanding more features? Are potential customers searching for lots of terms related to your product? Are they doing competitive shopping for price comparisons? Knowing more about their buying habits gives you greater insight into what they might do in the future.
Understand the Purchase
What the customer does with your product after purchase can give you greater insight into what you might sell them down the line. Harvard’s Business Review talks about dividing your end users into segments so you better understand who does what with your product.
The advantage to categorizing in this manner is the simplistic approach to reviewing your customer base. At a glance, you can quickly gauge which segment has the highest demand for your product. That decision may drive the messaging in your advertising, or reveal how to focus on your product lineup so you’re only selling the products most in demand.
Remember that you can also commission research into this topic by hiring outside companies to prepare surveys and collect and report on that data for you. Some of this is manageable in-house, but better tools always provide better insight.
Another important element to demand is agility. You need to keep an eye on industry news and what your competition is doing, as well as related news for outside factors influencing your business. Hurricane Harvey is a good example of outside impacts that hurt business prospects, where one of the immediate effects was a rise in gas prices because the supply chain was disrupted.
Not much can be done in a natural disaster, but perhaps a business can mitigate a risk or loss by deploying a team local to the area. Perhaps better disaster planning for the future can stop problems from arising in the first place.
Agility means planning and remaining prepared for the unknown. You can also use historical data, which is a popular metric in real estate.
Managing inventory and demand is a challenge that every business faces, but the right tools can help you find meaningful data. Good decision making comes down to staying in touch with your market, and in tune with the needs of your customers.
You may be interested
Understanding the need for email validation and how it is helpful for the usersadmin - July 24, 2021
Validating emails is a verification process to determine whether an Email ID is valid or not and if it is…
Importance of earning money:admin - July 5, 2021
“The best way to double your money is to fold it and put it in your savings” many of them…
The Importance of Warehouse Management Systems for BusinessesAlton Elliott - July 2, 2021
Medium and large-scale businesses need to keep an eye out for their inventory at all times if they want to…