Traditional demand planning and forecasting methods fall short of accurately predicting the future. On top of everything, external forces play shape and reshape demand frequently. With the advent of global networks of suppliers and distributors, businesses are constantly challenged to timely meet the evolving demands of hyper-local customers. Driving a perfect balance between surplus and adequate inventories in the absence of quality demand signals is a challenge for many.
Experts believe granular visibility and actionable insights can only drive business growth in the face of precedented and unprecedented challenges. And it starts with demand sensing.
Meeting immediate market demand is the key to winning more customers and staying ahead in the competition. The existing methods have been proven wrong during the global pandemic, alienating customers from brands when the latter failed to keep the shelves stocked amidst panic buying.
Enterprises today are looking to predict future demand based on current trends as closely as possible. Demand sensing is probably that missing piece of the whole puzzle. It leverages advanced technologies like Artificial Intelligence, Machine Learning, to analyze the data captured from various touchpoints to create visibility of the changing patterns in the market demand for goods and services.
Accurate forecasts eventually translate into better business decisions, improved inventory management, reduced operating costs, and in achieving critical business objectives.
Historical data might be the ideal starting point for forecasting future sales. But old data rarely considers the current trends, which cumulate into more significant problems faced by businesses today. And one of the reasons is the increasingly shorter lifespan of products. Also, customers today are spoiled for choices, which can be cited as another reason why a robust tech-based forecasting solution is needed.
Demand sensing solution is tasked with reducing or overcoming latency issues. Anticipating short-term demand changes in the market with the help of AI-powered demand sensing solutions can overcome such problems by reducing the time between the occurrence of an event and its response.
Therefore, organizations can witness the most significant returns from demand sensing, which roughly comprises six essential parts or elements:
Sell-in data: You cannot predict the future without adequate data. Demand sensing uses daily sell-in granular data to forecast demand for shorter periods.
Sell-out data: Downstream sell-out data at the buyer’s end, PoS, or channel data can identify the sudden change in demand trends and provide timely warnings so businesses can seal the time gap between planning and executing to match demand.
Appropriate product history: Historic data is the foundation for predicting future demand. But not all past data are useful for catching demand signals. Hence, narrowing your database to a specific period is the best bet. On the other hand, too-old data or those belonging to periods that do not correlate with contemporary demands should be best avoided.
Internal trends: These trends highlight certain sales patterns of a specific product or group of products. Sales patterns of such products vary, going upwards at a certain point in the year while dipping at other times. For instance, demand for winter garments remains high during the fall and early winter. However, their demand drops during the spring and summer months. Such seasonal variations and sales patterns are valuable insights for predicting future sales.
External data and demand casuals: External elements can seriously impact market demand, most of which are quite unpredictable in nature. A demand sensing solution offers integrated demand-correlated variables to create forecasts that can very well respond to a wide range of future events, both known and unknown. So, be it stock market fluctuations or weather shifts, competitors’ promotions or viral social media trends, new product introductions, and other external factors, your forecasting can keep your business future-ready always.
Events and promotions: Various events and promotions also substantially impact the future demand for goods and services. They can increase sales of specific products or introduce new items altogether. Demand sensing can help businesses stay prepared with adequate stocks to meet the sudden surge in demand for certain items triggered by events and promotions.
TradeEdge Demand Sensing solution by EdgeVerve provides granular insights to help businesses with actionable decision-making pertaining to predicting future demands and driving business growth at scale.
In a nutshell, the demand sensing solution helps enterprises overcome the barriers to growth, from lack of visibility to consumer offtake to enhancing forecast accuracy. Since product lifecycles are getting smaller and consumer preferences are changing faster, old legacy approaches to predicting future sales no longer meet the eye. Hence, an intelligent solution is needed, and demand sensing is the one.