Why you need automated demand forecasting

Over the past two years, the covid pandemic has caused significant disruptions to both local and global supply chains, highlighting the need to plan for more situations than previously needed. To do this, manufacturers need forecasting solutions capable of handling this new and harder-to-predict world we live in. From evolving supply chains and changing shopping preferences to weather and logistics problems, planning for the future now require companies to think differently.

The importance of accurate demand forecasts for production

Creating the most effective production schedule is all about anticipating what the requirement will be in the future, either you are following a make-to-stock or make-to-order model.

For make-to-stock manufacturing, optimizing the production runs can result in significant savings through reduced labor costs and more efficient utilization of the production machinery. At the same time, optimal production planning makes it possible to reduce inventory levels or reduce production time and deliver products with longer expiration date, reducing waste.

For make-to-order manufacturing, in the short-term having access to accurate forecasts is essential to ensure you are prepared to produce the required goods. While for the long term, accurate forecasts can help foresee significant changes in demand that would require either increasing capacity to meet the demand or reducing the capacity to reduce running costs.

In both cases, more accurate planning leads to higher customer satisfaction through shorter lead times and a higher degree of completed orders.

The importance of accurate demand forecasts for logistics

Logistics planning is often overlooked when considering the importance of demand forecasting. This is unfortunate since logistics must often deal with many apparently unpredictable unknowns like weather, erratic fuel costs, or container availability.

The basic tools needed to address these challenges are accurate and up-to-date demand forecasts. Demand forecasts help provide the all-important information about how much product you need to have available at any given time or place. When planning using accurate demand forecasts you can plan for unexpected situations, cut costs, and improve the flexibility to handle disruptions.

The importance of accurate demand forecasts for procurement

Procurement managers must consistently plan and update purchasing strategies in advance of demand, and wrong decisions can quickly lead to the ordering of the wrong quantity of materials or materials not being available when needed for production.  This leads to lost sales, or in extreme cases, to shutting down production. At the same time, reducing the inventory levels as much as possible can result in significant savings, and is a high priority for many manufacturers. Indeed, the most cost effective just-in-case manufacturing is achieved with accurate and flexible long-term planning based on accurate forecasts. Other manufacturers turn to just-in-time manufacturing and ordering, but to implement just-in-time, you need to have accurate and up-to-date forecasts.

The ability to keep track of the changing demand using accurate demand forecasts is therefore essential to create optimal purchasing strategies, whether you are following a just-in-case, just-in-time, or a combination of those two strategies.

The problem with most forecasting solutions

While many multi-functional systems like ERP (Enterprise Resource Planning) solutions do have forecasting tools built-in, they were often originally designed for a different time, with simpler supply chains, more predicable markets, and slower release schedules.

To achieve good forecast accuracy with these tools, a significant amount of very skilled and expensive manual labor is needed to tune the statistical models and represent known details of the supply chain. This often leads to a situation where one is in practice forced to either simplify the models (and sacrifice accuracy) or continually invest large amounts of resources in maintaining the forecasts. And even this is often not enough to ensure that the forecasts are as accurate as they could be.

Furthermore, today the supply chains are changing quicker than ever before, and manufacturers are expected to have shorter lead times even during times with much more volatile or sporadic demand. Products with sporadic demand are harder to forecast and require data from many more data sources than most systems can use.

At the same time, manufacturers are now releasing new products at a much more rapid pace and, it’s not uncommon for some manufacturers to now both release and discontinue some products within 6 months, making many of the older techniques useless.

To deal with this new and challenging environment, you need automation and the ability to trust that the automated forecasts are both accurate and representative of the future development of the rapidly evolving supply chain.  

Automated demand forecasting in Future Then View

With Future Then View, automation is the name of the game. The entire system is designed from the ground up, using the latest technologies to automate every part of the forecasting process. Everything from data collection to production and optimization of forecasts is automated.

The forecasts produced by Future Then View are much more detailed and accurate than any earlier technology and what any competitor within the same price range can achieve. The system automatically deals with products with sporadic demand and adapts to changes in the supply chain and markets, to ensure that the forecasts are always of optimal accuracy. Giving the users unprecedented insights into their future demand.

The high level of automation also eliminates much of the manual work needed with other systems and reduces the need for highly skilled users. In fact, through a two-day seminar provided by Future Then AS, most people with a business background can be tough how to use the system well.

There is no doubt that information is the key to great forecasts and Future Then View utilizes both internal and external data to provide the best possible forecasts for our customers. On top of that our experts can assist with finding and integrating additional sources of data to help your forecasts reach even higher levels of accuracy.

Collaboration is often the best way to achieve anything, and forecasting is no exception. Whether this is collaboration between people or between man and machine. Future Then View is designed for both. While the system uses an extensive dataset to produce the best forecasts possible, no organization has digitized every piece of relevant information. Whether this is offhand thoughts shared during an informal meeting with a customer or something seen out the window, this can also be entered and used for forecasting. There is no limit to what types of data can be processed and utilized.

Contact us to discuss how Future Then View is right for you.

Written by

Marius Geitle
Haris Jasarevic