If you run a business, you want to maximize your profit while minimizing your overhead expenses. Therefore, you need to meet the demands of your customers. On the other hand, you also do not want to spend money unnecessarily. That is where demand forecasting can be helpful. If you understand exactly how much demand your business is going to have in the near future, you can make sure that you have the staff to meet their needs. You can also make sure that you have enough inventory to meet the demands of your clients. If you are looking for a way to forecast demand, what are some of the tips that you need to keep in mind?
Gather the Right Information
The first step is to gather the right information. For example, instead of focusing on an entire line of products, take a look at a few specific products. Then, track them over time. That way, you can organize your old data in a way you can digest easily later.
For example, if you provide clothing, you probably expect your sales to wax and wane over the course of the year. Winter clothes are going to sell better during the winter. Summer clothes are going to sell better during the summer. Which products are going to sell better than others? If you track them, you can use this information later. That way, you can purchase an up inventory and have enough customer service representatives to meet the needs of your customers during a specific season.
Decide What KPIs You Need To Track
Then, you need to figure out what your key indicators are going to be. So, your demand is fluctuating over time. Why is this the case? Some of the key performance indicators you may want to follow when it comes to your customers include their age, gender, location, and other identifying information that could be of use to you. You may also want to take a look at environmental factors. For example, severe weather could also impact your sales.
If you work in a contracting industry, severe storms may actually be good for your business because more people are going to need home repairs. This is just one example of why you need to figure out what your top KPIs are going to be. That way, you can track them effectively.
Figure Out How Much Time You Need
So, you know what products you are tracking and what your KPIs are going to be. Now, you need to decide what your lead time is. If you need to hire more customer service agents to meet the demands of your customers, how much time do you need to find the right people and train them? If you need to purchase more of a specific product so that you can sell it on time, how much time does it take for you to restock that product? This is going to play a major role and whether you can efficiently meet the demands placed on your resources.
Put Demand Forecasting To Work For You
This is just a general overview of how the process of demand forecasting works. Of course, this process is going to vary slightly from industry to industry. If you are looking for a way to efficiently forecast your demand, you may want to take advantage of an advanced suite of software programs that can do this for you. This can help you save valuable time when it comes to forecasting your demand. That way, you can focus on more important business needs.