If you run a business today, then you want to limit your overhead expenses. On the other hand, you also have to meet the demand of your customers. Otherwise, they are simply going to go somewhere else. That is where demand forecasting can be helpful. You want to be able to anticipate the demands of your customers; however, how can you match this with your customer service team and relevant supply? There are several key questions that you need to answer.
Does Your Business Vary with the Season?
First, you need to see if your business varies depending on the time of year. For example, there are a lot of companies that see their demand pick up during the holiday season. Therefore, they are able to anticipate the demands that will be placed on their staff and inventory ahead of time. In order to accurately forecast this type of demand with the season, it is critical to take a look at historical demand. What happened during the same time last year? Do you run a business that tends to pick up during the winter? Or, does your business tend to pick up during the summer? If you are able to anticipate seasonal demands ahead of time, you can train enough employees and stock up on inventory before that time of year arrives.
Is There New Competition in Your Industry?
Next, in order to forecast demand, you also need to check and see if there is new competition in your industry. Even if you plan on beating this type of competition, you do need to anticipate the possibility that this new competition could take a bite out of your business. If you do not anticipate this change accordingly, then you could end up hiring more people (or stocking up on more inventory) than is necessary. Do not spend money unnecessarily. While it would be nice to assume that your company is not going to feel the sting of new competition, there is probably going to be some hit to your business. Plan for this ahead of time.
Does Your Supply Impact the Overall Demand?
Finally, you also need to think about whether your supply might impact demand overall. For example, if your company sells a lot of a certain product, does this mean that demand for another product is going to go up or down? If you are able to use advanced analytics to find the answer to this question, you can predict the influence of your supply on your own demand. That way, you can see how your own supply could impact the demand for certain other products and services you provide. If you are able to anticipate these changes ahead of time, then you can respond before your competition, placing your company in a stronger position moving forward.