Demand forecasting is a constant challenge for supply chain managers. Customers often do not know exactly what they will need in the future, and many companies have particularly short production cycles. There are many reasons that make reliable forecasting difficult, from fluctuating demand to fickle supplier schedules.
Every previous order should be stored in ERP. Systems like SOFTONE Cloud ERP Series 6 aggregate all data, from customer name and inventory management to order and delivery dates, so it's available for analysis and forecasting. There are many mathematical models for forecasting demand, and it's almost certain that your supply chain and order data will fit one of them with a reasonable degree of accuracy.
You can use the ready-made models that come with your ERP or extend its capabilities with additional tools. Built-in demand forecasting tools for inventory optimization are readily available and usually sufficient. There are also third-party solutions, which although often are interesting options, can have a higher cost.
Another ERP tool that can significantly contribute to demand forecasting is CRM. You can ask your customers directly which products and in what quantities they intend to order. If you have a good relationship with them, they may be willing to share their own forecasting data with you. Set up your CRM to send periodic polls and track the responses. Process the results as statistical time series, just like your real missions.
Marketing can also support the forecasting process. He knows if any promotion is going to be implemented, which may affect the demand, and he has to transfer this information to the sales ERP. In addition, marketing has knowledge of external factors that may influence market trends.
Best practices for demand forecasting through ERP include holistic integration of all data sources: supply chain, CRM and marketing. Your ERP will create a reliable demand forecast that can be leveraged to update your supply chain in a timely and efficient manner.
Analyze your stock keeping forecast (SKU) and sort your products into families. Applying this technique in conjunction with the above practices, you may find that while forecasting for an individual item is difficult, forecasting at the product family level is much more feasible and valuable, especially when those products have similar characteristics within the supply chain.
Finally, identify the items you need and consider which ones are low cost. If so, you can maintain larger inventories at a limited cost, thus ensuring better availability and flexibility in meeting demand.
