Demand Forecasting is usually the starting activity of any S&OP process. It uses a variety of different methods in order to estimate the quantity of a product or service that consumers will purchase in the near future. Forecasting techniques include both informal methods, such as educated guesses, market knowledge and statistical methods that use historical sales data or current data from test markets to forecast the future. Given the wide variety of product types and their associated consumption, Demand Forecasting is a complex process which almost assumes an art form.
Demand Forecasting becomes the start point for many key decisions including Product Pricing, Product Promotions, Production Planning, New Product Development etc. Collaborative Demand Forecasting ensures that Demand Forecasts are generated scientifically and discussed not only with all the relevant parts of the sales organization, but also across other functions such as Production, Procurement, Finance and Corporate. This increases the visibility and acceptability on the direction and course of action in the medium term.
Demand Forecasting cannot merely be approached using just statistical techniques. Since Demand is an outcome of a number of factors, the statistical forecast becomes the starting point based on which the Sales team on the ground create the Bottom Up Demand Forecast. This in itself may not be sufficient as it could fall short or not in consonance with the firm’s business / operational plan wherein there has to be provision to normalise demand from statistical forecast and bottom up forecast to be in line with the top down forecast.
Our solution uses both qualitative and quantitative methods to create a Demand Forecast. On the quantitative side, we have integrated the powerful R Statistical and Graphical Modelling tool that enables the application of a variety of statistical techniques in different situations. On the qualitative front, our solution facilitates collaboration with sales people and also allows custom data measures that help capture the qualitative aspects of Demand Forecasting. Additionally, the facility to define different hierarchies of Products, Supply Chain, Organization Structure is also provided so that data can be spliced in a form specific to the organization.
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