Demand Forecasting Process for Food and Beverage Distributors

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Planning within the food and beverage industry is complex. Teams must collaborate and plan efficiently to increase profitability.

Historically, distributors have been “order takers” pushed around by much larger manufacturers and retailers. However, recently, distributors have become strategic partners since numerous upstream and downstream relationships in the supply chain provide unique visibility to industry trends. Distributors bridge the gap between manufacturers and retailers because they are exposed to data from both ends of the supply chain.

Demand Forecasting Process

This process is one that many food and beverage distributors fail to do at all, or at least fail to do well. In return, they pay the price in terms of lower customer service levels, higher product spoilage rates, higher freight costs, and lower profitability.

Without an accurate estimate of future demand for the products being carried, it is difficult to know what to buy, how much inventory to hold, or whether your business is on track to reach customer service targets.

The continued growth of omnichannel grocery sales, with rapid increases due to COVID-19, has only compounded the pressure on wholesale distributors’ supply chains. Consumers no longer see shipping as a value-added service but an essential offering from distributors. Many e-commerce channels, such as Amazon, who are often both large customers and competitors at the same time, require different planning approaches than traditional brick-and-mortar customers.

Demand forecasting can be complicated because many different factors impact it. Such factors include customer ordering patterns, seasonality, promotions, cannibalization from new products, and major events, such as natural disasters or the COVID-19 global pandemic. The easiest way to overcome these factors is to let technology handle this complexity. Organizations should leverage a purpose-built forecasting solution that can automatically analyze historical demand data to identify trends, patterns, seasonality, and outliers and use that information to prepare forecasts.

Using a demand forecasting process requires no additional effort for distributors yet provides far better input to your team’s planning process. It is a common misconception that products with intermittent, sporadic, or lumpy demand cannot be forecasted. Modern forecasting technologies have specialty methods designed specifically for these types of products.

Why Vanguard?

Vanguard enables organizations to integrate the distinct application of sales forecasting, supply planning, and financial forecasting to a single platform designed to unify management estimates, exceptions, and data. Vanguard integrates seamlessly with business processes, enabling diverse teams and users to communicate and collaborate.

Vanguard Predictive Planning™ for food supply chains is a cloud-based planning and forecasting platform designed to help food and beverage manufacturers and distributors collaborate with all aspects of their supply chains, and where both suppliers and buyers are assured the best possible product availability, safety, and fulfillment at the highest possible profit. Vanguard Predictive Planning enables organizations to maximize forecast accuracy, improve intra-company and partner collaboration, reduce stock-outs, and improve service levels, revenues, and consumer satisfaction. Contact us today for a software demo.