Regardless of where your organization is positioned in the food supply chain, your operations can almost certainly benefit from more accurate demand forecasting. This idea is not new. Efficient demand planning processes combined with an accurate demand forecasting solution help optimize operations, improve labor productivity, and minimize loss while maximizing profit. In food supply chains, perishables, in particular, there is also the potential to reduce food waste and spoilage while maximizing profit. This is a multi-dimensional problem that producers, suppliers, and retailers alike have the power to mitigate. Here is a breakdown of demand planning and demand forecasting:
Demand planning refers to the use of a combination of forecasts and human input to estimate the demand for products at various points in the supply chain. Planners then tailor a strategy around this information. The demand plan requires a great deal of information to predict product demand adequately. The end result of an effective demand planning process is highly accurate demand forecasts that support company-wide strategies.
Demand forecasting, on the other hand, refers to the process of predicting product demand. Accurate forecasting is an output of demand planning. It accounts for other factors, including qualitative measures, possible impacts of promotion or events, and actual sales data.
In short, demand planning is a process, where demand forecasts are the result (numerical values) of the demand planning process.
Demand Forecasting Solution
There are numerous systems that could be put in place to aid in forecasting, many of which rely on Excel spreadsheets. While they certainly have more value as a system over having none at all, Excel spreadsheets are time-consuming and rely on human input, thus making them vulnerable to human error.
The best demand forecasting solution would be an advanced forecasting technology that uses artificial intelligence and machine learning applied to not just historical trends and data, but also to potential factors that could influence demand, along with the knowledge and collaboration that comes from within your organization’s firsthand experiences.
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, including suppliers and buyers, to ensure best-possible product availability, safety, and fulfillment at the highest possible profit. Vanguard Predictive Planning includes applications such as demand and supply planning, inventory optimization, product portfolio optimization, new product planning, sales and operations planning, and integrated business planning. All of these applications leverage Vanguard’s in-memory database that is pre-built with industry leading forecasting algorithms and features to automate your supply chain processes while improving accuracy and efficiency for maximum returns.
The need to balance supply with increasingly varied demand is more critical than ever before. Food and beverage organizations, manufacturers, and distributors must optimize inventory levels to have the right product variety and amount in the right place at just the right time. 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.