Demand Sensing is the ability to pick up on short-term trends immediately allowing you to predict what customers want and when they want it better. Rather than working with the same forecast over time, you can challenge forecasts with the latest data and make improvements that boost profits. Demand sensing gives you the ability to analyze demand data rapidly and to decide how and when to act. Short-term forecasting leverages a high level of data granularity analyzing demand information closer to the end customer and detecting changes in demand behavior.
Top 5 ways Demand Sensing can turn insights into action:
- Reduce demand latency when there is a distributor/retailer between you and the end customer:
You are likely collecting point of sale data but are not using this data to gain market insights rapidly to improve your services. Demand sensing allows you to acquire relevant information directly from the point of sale data to improve forecasts without having to wait for your distributor. With earlier demand insights you can better input supply signals.
- Make better use of existing inventory in the short-term:
Demand sensing enables you to optimize inventory dynamically and allows you to balance your network by considering available inventory and expected customer demand. This sets companies on the path toward reducing high inventory levels while still maintaining customer service levels.
- Generate a more precise forecast for seasonal demand:
With the rapid insights from demand sensing, you are able to anticipate what is to come and react quickly. Expanding visibility of your distribution network reduces demand latency and drives better supply through the network. When an item stocks out or doesn’t sell as expected, you can act quickly to adjust production and inventory minimizing negative impact.
- Understand promotion performance:
Using insights on items with a promotion helps you understand the promotional uplift and customer response to promotional campaigns, allowing you to forecast demand on future promotions better. This also enables ROI tracking on promotional efforts to ensure items are selling at appropriate levels to cover the price change.
- Introduce new product inventory:
Short-term product lifecycles make it important that companies understand New Product Introduction (NPI) demand forecasting. As new products come in and replace existing products, demand sensing helps ensure you have the most optimized amount of the existing product on hand to meet the new product demand. Demand sensing also provides insights on how the consumer will respond based on trends and historical data of similar items being introduced to the market. Forecasting demand during the launch period of an item is essential to businesses that realize the bulk of sales revenue during the first months following the launch. That makes demand sensing software, not just a better forecasting tool, but a revenue and growth generator.
Demand sensing can extend your supply chain visibility by looking for patterns in point of sale, promotion, new product introduction, etc., to make near-term improvements to your forecasting and inventory placement. Demand sensing reduces demand uncertainty and enables critical adjustments to your forecast without waiting for your next forecast cycle.