This process can be time consuming and the data provided can be overwhelming. Generating insights where action is clear is not a guarantee. With all of this you need to have clear sight into the past, present, and future of your business and its’ landscape.
When seeking to generate a clear forecast there are three primary aspects to know:
- Your Business
- The Competition
- Tertiary Complications
In this guide we will explain how to modernize your approach to spend more time improving your business and less time on redundant tasks.
1. YOUR BUSINESS
The cornerstone to any Demand Forecasting is pulling historical data for your own business and interpreting the trends in order to adjust things such as supply or price. Unfortunately, a company’s individual environment can create variation based on the health of their data. Other effects can also create variance in your predictions such as geography or external complications.
The first step one should do is audit your internal data and ensure that discrepancies are found. Once your data has been audited you need to identify key metrics to measure consistent trends lines that provide actionable insights and tell a consistent story. Does just looking at sales tell the full story of what happened a year ago, two years, ten years? Are the people who were tracking the data then still with your company and, if not, how extensive are their notes on why a dip happened in a specific month several years ago? How does seasonality affect your business specifically are there months that your business trends high or low?
2. THE COMPETITION
Once you have a baseline for your Demand Forecasting within your own business you need to look beyond to your competitors. Understanding not just your competitions level of success but also where they are investing interests is extremely important in predicting where the market will be leaning currently but also in the near future. Gathering this information can be a process of vetting several different sources that show only a glimpse of the full picture you are aiming to see. For example, overlooking a competitors public tax information may provide some helpful information but will not paint the full picture.
3. TERTIARY COMPLICATIONS
Now that you have a better understanding of how you and your competitors are dealing with the market you might think that your job is complete. However, now more than ever, it is increasingly important to understand outside factors that can impact your business and make efforts to predict and adapt as they arise. Closed or restricted borders can dramatically affect your supply or demand and, as with most things, it is almost always better to be proactive rather than reactionary. However, measuring and accounting for a large list of possibility can be difficult to track and prepare for. Having systems in place for tracking these potential risks will not only give your company an advanced heads up on upcoming problems but better equip you to respond rapidly.
Manually pulling data regularly from your own company, let alone competitors and tertiary conditions, can be a lengthy and time-consuming process. A lot of companies have resigned to only doing these extensive analyses once or a handful of times a year. With the advancement of Machine Learning and Artificial Intelligence these time-consuming processes can be refined and made a regular day-to-day operation allowing you to make timely decisions and breaking the reactionary cycle.
Demand forecasting can be simple or complex. The increased complexity provides deeper insight that can provide your company a competitive edge. However, traditionally this increased complexity comes with a high overhead cost. With the advent of advanced technology these overhead costs can be significantly reduced allowing you to retain your competitive edge without having to sacrifice manpower.
This process is complex and extensive. If you are interested in modernizing and scaling your Demand Forecasting process to face your industries complex landscape we would be happy to provide assistance.
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