One improvement an organization can make is the use of collaborative forecasting. It is a concept that aims to enhance supply chain integration by supporting and assisting joint practices. Collaborative planning, forecasting, and replenishment seeks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain. Information shared between suppliers and retailers aids in planning and satisfying customer demand through a supportive system of shared information. Following are three benefits of collaborative forecasting for supply chain management.
1. Optimizes inventory levels
Correct inventory levels are imperative; no one wants a stockout. What is the driving input to supply plans? The demand forecast.
Collaborative forecasting provides organizations with an optimal process to support the human element of forecasting. This process should additionally leverage advanced forecasting techniques, which should utilize the latest data and make predictions about the future needs of certain products. As a result, organizations can discover which products are likely to sell in the future and, if necessary, make adjustments to their production and ordering processes.
Collaborative forecasting manages sales expectations throughout the pipeline, from production through to delivery.
2. Increases sales
Forecasting future sales is difficult for any manufacturer. However, making accurate predictions about future sales growth benefits business owners in multiple ways. Statistical sales forecasting, in general, provides organizations with raw data about customer trends and behaviors, and the overall demand for goods. This information helps them plan for the future. They can order more materials or products to meet the anticipated demand for their goods, for example.
Collaborative forecasting takes statistical sales forecasting to the next level. It uses historical demand data to predict sales in the weeks, months, and years ahead. Organizations can use this to their advantage and adapt their business models for the future.
“Collaborative forecasting applies supply chain management concepts to the forecasting function and uses available information and technology to force a shift from independent, forecasted demand to dependent, known demand,” say researchers who studied the effects of collaborative forecasting on supply chain management.
3. Manages staff more effectively
Too many employees can result in increased costs for organizations. Imagine if there were a way to anticipate staff demand. With collaborative forecasting and advanced Integrated Business Planning (IBP) software, there is. Using the sales forecasts, capacity plans, and IBP software lets organizations manage staff numbers throughout the year. As a result, these business owners optimize their HR processes and make sure they have the right number of employees at all times. Analytics forecast when organizations need additional staff, for example, in the run-up to the holidays.
Collaborative forecasting, enabled by IBP software, can even identify skills shortages. Organizations can use this method to discover the kind of employees they need in the future to maximize supply chain success.
Collaborative forecasting isn’t just another buzzword. It’s an effective measurement method that benefits manufacturers in almost every vertical. Incorporating collaborative forecasting into their business helps manufacturers optimize inventories, increase sales, and manage staff more effectively.
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About Vanguard Software
Vanguard Software introduced its first product for decision support analysis in 1995. Today, companies across every major industry and more than 60 countries rely on the Vanguard Predictive Planning platform. Vanguard Software is based in Cary, North Carolina.