Demand Forecasting and several types Explained

Demand forecasting is the processing of estimating future demand for product or service which then informs business about the estimated product or service which then informs businesses about the estimated product or service quality that consumers may want to purchase over a period of time. Accurate forecasting is important for business to plan production in order to meet customer demand over estimations or under estimations of customer demand can lead to excess inventory or a short supply of products.

There are several types of demand forecasting, your forecast may differ based on the demand practice is to do a multiple demand forecast. This will give you a more well-rounded picture of your future sales using more than on forecasting model can also highlight differences in predictions. Those differences can point to a need for more research or better data in puts.

Passive demand forecasting is the simplest type. In this model you use sales data from the past to predict the future, you should use data from the same season to project sales in the future passive demand fore casting is easier than other types of because it doesn’t require you to use statistical methods or study economic trends.

Active demand fore casting

Is your business in growth phase or if you are just starting out, active demand fore casting is a good choice to help you make informal decisions. An active fore casting model takes into consideration your market research marketing campaigns and expansion plains. Active projections will often consider external factors, considerations can include the economic outlook, growth projections for your market sector and projected cost saving from supply chain efficient startups that have less historical data to drown on will need to base their assumption on external data.

Short term projections

Short term demand forecasting looks just at the next three to 12 months. This is useful for managing your just –in-time supply chain. Looking at short term demand allows you to adjust your projection based on real time sales data. It helps you respond quickly to changes in customer demand.

If you run a product line up that changes frequency, understanding short term demand is important, for most businesses, however a short term forecast in just one piece of a large puzzle you will probably want to look further out with medium or long term demand forecasting.

Long term projections

Your long term forecast will make projections on to four years in to the future. This forecasting model focusses on the shopping your long term planning will be based partly on sales data and market research, it is also aspirational, being ready for your business growth is crucial to making that growth happen.

External macro forecasting

External macro forecasting incorporates trends in the broader economy. This projection looks at how those trends will affect your goals on a macro level. An external macro demand forecast can also give you direction for how to meet those goals your company may be more invested in stability than expansion. However, a consideration of external market forces is still essential to your sales projections.

Internal business forecasting.

One of the limiting factors for your business growth is internal capacity. If you project that customer demand will double, does your enterprise have the capacity to meet that demand. Internal business demand forecast review your operations internal business demand forecasting is a help for making realistic projections. It can also point you toward areas where you need to build capacity in order to meet expansion goals.

b) why would you advise Nancy to embrace ERP as a tool for managing inventory flow.

A previous Article on enterprises resource planning software ERP software mentioned the benefits of artificial intelligence A.I and Machine learning ML in business software. This Article covers how inventory management function as part of an ERP and below is the advice that will be given to Nancy to embrace ERP as a tool for managing inventory flow.

 

 

Improving inventory accuracy

Some modern ERPS like Microsoft, dynamics 365 finance come with many build in AI and ML capabilities. This functionality jets executive review sales data, seasonal demand and other information to predict inventory needs by comparing historical and current data companies can advise a robust plan to increase or decrease inventory and storage capacity resulting anticipated market conditions. D365 finance also accepts variables for greater accuracy.

Segmenting, clustering and classifying materials

Isolated data is only valuable to that portion of the business to help the entire business and provide insights, data must be valuable to other departments using an ERPs Inventory management module lets companies tag, cluster and analyze each item or stock keeping unit SKUL. It provides labels that can be read by mobile phones and other portable devices. Providing access to a wealth of information while tracking every item. Classification option include

·         Units of measuring

·         Product sage

·         Material source

·         Cost and price                                            

Making ware house more intelligent.

When products are given machine; readable barcodes or QR codes labels companies can truck material movement in real time.

Modern ERP lets warehouse managers create an operative warehouse plan access controls at every level. This is particularly crucial for manufacturers with multiple production sites. Setting access controls ensures the right people can move inventory items at the right time.

Permit accurate and timely inventory planning

An ERP system ensures companies maintain ideal stock levels permitting more efficient use of working capital.

Today’s ERPS come with features that help with material requirements planning ERP this includes production scheduling, setting up records levels and establishing inventory minimum and maximum level.

Reduce waste

The combined benefits of classifying items and inventory management module of an ERP provides complete visibility products. Module of an ERP provides complete visibility of all inventories including clusters and substitute products. Module users also sort inventories by batch numbers or serial numbers.

Managing returns and orders cancelations. ERPS manage returns with greater ease than older methods. ERPS reconcile sales credit memos and accounting letting companies issue refunds or shipping fresh products.

Easy tracking of refunds and reshipments.

Automatically calculates foreign exchange rates.

Qn2. Discuss the typical procedure of issuing stock in a warehouse

The typical procedure for issuing items in a stock ware house involves several steps

Receipt of the request; the store house receives a request for   specific stock item from the requesting department or individual

Verification of stock availability; store house checks the stock availability and ensures that there is enough stock to full fill the request.

Preparation of issue slip

Once the stock and availability is confirmed the structure prepares and issue slip for the requested items.

Approval of the issue slip

The issue slip is then forwarded to the authorized person or department for approval.

 

Issuing the stock item

After the issue slip is approved the store house personnel retrieve the requested items, from the inventory and issue them to the requesting department or individual.

Updating inventory records

The storehouse personnel update the inventory records to reject the insurance of the stock items

Its importance to note that the exact procedure may vary depending on the specific stock house and the type of stock item’s being issued.

Additionally, some store house may use computerized inventory systems to manage insurance which may involve additionally steps such as scanning barcodes or RFID tags.