Six Reasons Why COOs Are Embracing Demand Forecasting

There are six powerful factors driving the COO’s rising interest in unified demand forecasting. This is partially driven by companies shift from siloed, stand-alone approaches to unified, enterprise-wide operations. Market leaders are paying attention to these six additional drivers:

  1. Financial gain. The goal is the right inventory, in the right place, at the right time, in the right amounts. A more productive inventory maximizes revenue and margin potential. As you ratchet up the precision of the forecast, you drive intelligence into the planning process. With better accuracy, even a one-point increase in forecast accuracy could translate into multiple millions of dollars in ROI.
  1. Variability. In variable situations, it’s essential to break the total demand signal down into actionable parts. This enables a company to tweak those parts and outpace previous performance. It allows better prediction of the true impact of different levers and scenarios on the business. We’ve seen a beverage company implement a demand signal that predicted variable scenarios, increasing their forecast accuracy by 13 points.
  1. Consistency. A forecasting platform provides the ability to address a business problem in a repeatable way. This adds immediate value because you don’t have to reinvent the wheel each time you forecast 
  1. Elasticity. By producing a set of elastic demand drivers – such as price reductions, features, displays, product launches, competitor information, etc. – a company can determine which strategy will deliver the best result. Demand drivers affect customers’ shopping behaviors, and our approach forecasts the true potential of lift (incremental units) through demand driver scenarios.
  1. Lower TCO. A unified demand signal replaces multiple forecasting capabilities with one set of data. This equates to one set of data feeds to manage, one environment to support, and a single team of experts. Our ability to distill a triple-digit basis point improvement in forecast accuracy over existing processes generates that value, reducing days in inventory by double digits, and improving margin.
  1. Single view. A single, unified demand signal drives intelligence to each functional area of the organization, making it clearer what each of those areas needs to do in response to the signal. No forecast, no signal, may ever be perfect, but by distilling the signal, it eliminates all the problems caused by multiple forecasts and multiple signals and reduces manual efforts with conflicting data. 

The Bottom Line

Utilizing a platform that senses, shapes, and harmonizes a demand signal across multiple business functions, companies are able to achieve a level of forecast accuracy that drives huge improvements in business performance across their entire organization, increasing their competitiveness. It gives them a more reliable, unified and comprehensive picture of their demand environment, offering the promise of increased revenues, streamlined operations, and greater operational accuracy.  

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