I am the Chief Operations Officer and Head of Corporate Development for ThroughPut Inc., a Supply Chain Management AI software company.
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Last year was a year rife with disruption. Nowhere was this more keenly felt than in the businesses working to keep the country moving. With the balance of supply and demand in disarray, it became even more important for business leaders to forecast product demand accurately, avoid unnecessary costs and spark growth. But what we saw instead — across end-to-end global supply chains — was forecasting tools falling apart.
If legacy forecasting models were out of date before, they’re practically obsolete now. In 2020, it became clear that the old models cannot keep up with the shifting demands of a highly interconnected global economy. We saw it with the toilet paper shortage, but it’s not just Covid-19 that will throw us for a loop. This current year is sure to present similar challenges if companies continue to couple stale data and rigid assumptions with old-fashioned forecasting methods and tools.
The Problem With Static Supply Chain Methods
The ideal supply chain is nimble. It is transparent, allows for change and reacts quickly to the way consumers are feeling and behaving.
Unfortunately, I’ve observed that today’s supply chains are far from living up to that ideal. They’re opaque, piecemeal and plagued by stale data and process bottlenecks from outdated systems. While every company produces a plethora of data, most of it is trapped in an alphabet soup of disparate data systems and siloed point solutions from legacy vendors.
The solutions are out there. Big data stores — in the cloud, data lakes and warehouses — have evolved. However, the reality is that most businesses are still working with an incomplete picture of their end-to-end business. They peer into their supply chain through narrow windows afforded to them by forecasting models made months or years in advance. Inevitably, these glimpses can be misleading because they are formed from assumptions rather than real-time insights.
If companies want to act on a full picture of their supply and demand, they need leading-edge demand sensing solutions able to match historic patterns and assumptions with real-time data. Using these tools, companies can create a layer of understanding over their processes such as when customers need new products and just which threads to pull to supply them. In turn, you’ll be able to minimize losses, maximize growth and generate greater free cash flow and profitability.
Three Steps For Successful Forecasting
Here’s how you can forecast demands more accurately to produce better outcomes:
1. Throw out legacy methods.
The first step is to ditch outdated methods of forecasting and planning that are not serving your business. If you’re continuing to wrench and warp your organizational brain to fit these narrow, constricting tools, you’ll expose your business to injury, weak spots and breakages. Connect with the complete picture. Embrace the use of your diverse data systems to create a more holistic view of your entire operations and end-to-end supply chain.
2. Leverage your own data.
You know you have a typhoon of data rushing through your business every day, but you’re likely only using it in very limited pockets. Start tapping the power of your own data and realize a competitive advantage in the marketplace. You don’t have to disrupt your current operations to achieve this; instead, start with a smaller pilot or enterprise project and work up from there.
3. Make smart adjustments.
Your demand sensing project will connect you with the real-time health and status quo of your company. This increased visibility will enable you to make smarter business decisions. You can use the outputs of your projects to compare against your status quo, make smart operational adjustments as you identify areas of inefficiency and help your profitability rise.
Don’t be afraid to experiment ahead of your industry. Great leaders don’t arrive at the front of the pack by waiting to see how others got ahead. To that end, lean forward, embrace demand sensing and seize your ability to leverage modern tools to benefit from highly accurate forecasting in an otherwise uncertain world.
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