Demand Forecasting for the CPG Industry

Line Art

There are constant challenges the Consumer Packaged Goods (CPG) industry faces daily, even without a pandemic looming over it. Using forecast and prediction to help inform decisions has always been a staple for the CPG industry. Now, in today’s globalized and digital world, modern demand forecasting tools have never been more essential for a CPG manufacturer to succeed.

The CPG industry can be rough and competitive. No matter what is currently happening around the world, there is a constant demand for food, beverages, and household goods – and constant competition. The CPG industry is one of the largest markets in North America, and it is saturated with brands trying to push their products off the shelves and into consumers’ hands.

Making matters worse, CPG manufacturers are under constant pressure to be adaptable. CPGs operated on the edge more than any other industry, having to respond to unforeseen changes and trends in real-time. This can be tricky when supply chains are global, and an unexpected disruption halfway across the globe can impact their bottom line.

New product releases, demand shifts, and supply chains are disrupted – if CPG manufacturers fail to keep up, the consequences are high because consumer switching costs are low. If one brand begins to fail to meet consumer expectations, there are many more waiting to fill the gap. As planners, knowing what to do and when to do it to stay ahead can be difficult. This is where demand forecasting comes in, providing the exact information that planners need to keep ahead.

Demand Forecasting

Demand forecasting is the process of taking known data from across the supply chain and conducting statistical analyses to predict future trends. By using scenario planning, possible outcomes can be researched so planners can make better-informed decisions. Data is produced throughout the entire supply chain. Demand forecasting can take all of that data and produce insights that planners can use to shape their strategy and decisions. Industry leaders agree that supply chain analytics and demand forecasting are not only the future for the CPG industry but are a critical business intelligence tool across every market.

Demand Forecasting in CPG

For all the challenges the CPG industry deals with, demand forecasting can help. Whether an organization needs to streamline, relocate resources, or find alternative sources and products to pivot around disruptions, demand forecasting can provide insights to help answer many problems.

  • Inventory Allocation: Getting products on store shelves is the only way to make sales. However, knowing how much inventory to send and to which stores can be tricky. Brands do not want to sell out at a location while having inventory build at another warehouse incurring storage costs. Or worse, creeping closer to spoilage or an expiration date. Demand forecasting can establish trends to help planners predict how much inventory is likely to be sold at various locations, considering seasonal trends, recurring events, and many other factors.
  • Planning: At the beginning of this year, the US economy was heading into the new year with solid footing. Three months later, the picture changed when the stock market plummeted and unemployment swept the globe due to COVID-19. For CPG manufacturers, consumer demand was not going anywhere, but consumer behavior and supply chain availability were heavily altered. Organizations in every market had little time to react to such an unexpected global event. Demand forecasting helps make adaptability and pivoting around unforeseen problems easier. Vanguard Predictive Planning™ enables planners to make multiple, rapid forecasts to test various scenarios quickly and make dynamic, informed decisions. Disruptions cannot always be avoided, but they can be mitigated.
  • Adapt to Variation: Even without a global crisis looming overhead, CPGs need to adapt to changing products and evolving consumer demands. SKUs change, current products are improved, and new products are constantly being released. All these factors add complexity to an already complex supply chain. Managing all these varying data is challenging enough; keeping up with the constant changes and options is even tougher. This is another benefit of a good forecasting model. Vanguard Predictive Planning allows users to generate forecasts for new products just introduced to the market.


Demand planning may seem difficult to do quickly and efficiently, but it does not have to be. The availability of data and the power of cloud computing means that demand forecasting can be used as a tool for every organization moving forward. These predictions are especially useful for the dynamic and challenging world of CPG. To learn how you can use demand forecasting tools like Vanguard Predictive Planning to enhance your potential, book a demo.