Supply chain forecasting is a critical skill to stay as prepared as possible for the ever-present volatility facing the logistics industry. For companies to have the ability to foresee and anticipate such changes is vital to ensuring the sustainability and success of their business.
If you need assistance forecasting your supply chain, the experienced logistics experts of IronLink can help.
What Is Supply Chain Forecasting?
Supply chain forecasting is the ability to predict the demands, supply, and
pricing within the given industries that rely on logistics. Supply chain forecasting has often utilized algorithms to create forecasting models and more recently have incorporated the latest in AI logistics technology as a means of improving accuracy. Supplier data, competition, and previous patterns are all valuable considerations in creating future predictions in the specific industry. In supply chain management, three types of forecasting exist:
- Supply forecasting predicts how much product will be available and when to help determine ordering and delivering product in specific timeframes. Supply forecasting identifies production, delivery, economics, technology, and climate trends and patterns.
- Demand forecasting predicts primarily consumer behaviors based on consumer confidence, seasons, and cultural trends. Demand forecasting is critical for the companies to efficiently manage their stock volumes.
- Price forecasting predicts product pricing based on cultural trends and expenses. Price forecasting incorporates data from both supply and demand models.
For the supply chain industry, demand forecasting has emerged as the most critical and most challenging of the various forecasts to develop. In lieu of recent world events and the negative impacts on global supply chains, predicting product demand has become increasingly complex. Call IronLink Logistics to learn how our 3PL Logistics’ best practices can optimize your supply chain forecasting.
Best Supply Chain Forecasting Methods
The best forecasting methods can vary from business to business and each individual’s economic constraints. The methods for supply chain forecasting can be categorized into two parts: qualitative and quantitative forecasts.
Supply chain forecasting can be accomplished several ways. Most commonly they are internal/external forecasts, active/passive forecasts, and short-term/long-term forecasts. Of all these variations of demand forecasting, the most significant and most effective are:
- Market research
- Sales composites
- Trend projections
- Delphi method
While there are a variety of forecasting methods and technologies available, it’s imperative for your enterprise to stay successful, that your forecasts are driven by sales, market, and economic statistics. Contact IronLink’s logistics experts to assist in developing supply chain forecasts to keep you ahead of the competition.
The Importance of Supply Chain Management Forecasting
Forecasting has an essential role in effective supply chain management. Accurate forecasting is vital for businesses to weather the recent volatility in supply chains. Supply chain forecasts can be of great benefit in:
- Planning for resource allocations and capacity utilization
- Creating more efficient production systems
- Predicting demand.
- Improving inventory management strategies
- Increasing customer satisfaction
- Managing more effective shipping
- Developing more accurate pricing and purchasing strategies
Effective forecasting is vital for maintaining optimal numbers of supply to satisfy demand without accruing obsolescence costs. Proper forecasts equate to better efficiency and better business.
How to Improve Your Supply Chain Forecasting
Your forecasting improvement begins with a self-assessment of your supply chain. Collecting and analyzing market data while evaluating your sourcing process is critical in comprehending and adapting to the dynamics of operational costs and prices. Updating your forecasting methods is the first step to improving their accuracy. Technological advancements have created great diversity in retrieving your own specific data and empower you to make smarter business decisions and adjustments.
Learn about our most popular types of forecasting (local, global, and large), and how IronLink typically approaches a supply chain strategy for these industry clients:
Improve Your Local Supply Chain Forecasting
Local supply chain forecasting improvements begin with reviewing your sales and operational planning. Analyzing items such as historical data and your competition can be a great asset in maintaining suitable stock levels. Anticipating surges in demand can keep you fulfilling orders and provide accurate estimations of sales, revenue, and profits.
IronLink Logistics is an experienced third party logistics company with the resources to help you with your supply chain forecasting. To continue learning, read our previous article on how to optimize your Direct-to-Consumer Supply Chain.
Improve Your Global Supply Chain Forecasting
Developing a global supply chain forecast requires a deeper look into your sourcing process. Geography and geopolitical implications are a tremendous factor in global supply chains. With so many sources moving from other continents, such as Asia and Europe, there is a vast potential of variables that could impede moving valuable resources in the supply chain. For example the Russian-Ukraine conflict and the blockage of the Suez Canal have presented great hurdles for transit in supply chains. Moving to domestic sourcing and increasing flexibility in the supply chain can become valuable improvements to your global supply chain forecasts.
IronLink Logistics is constantly staying up-to-date with the latest logistics technologies and global news. Learn more about the current trends affecting the logistics industry.
Improve Your Large Supply Chain Forecasting
Large supply chain forecasting incorporates equally large ecosystems of operation. Due to the great number of variables in the supply chains of such size, there is also an increase in the potential for data to be skewed and forecasting to be less than effective. Supply chains of this size coupled with poor forecasting can result in what is referred to as the bullwhip effect in logistics. The bullwhip effect is when small changes at the retail level grow progressively larger throughout the supply chain.
Help With My Supply Chain Forecasting
The supply chain will continue to encounter obstacles that will challenge the logistics industry. As we continue to navigate through the post-pandemic area, the dynamics of consumer behaviors, new technologies, labor shortages, and inflation, your logistics experts at IronLink can assist you with your forecasting needs.
At IronLink we can provide you with the latest methods and technology of data analysis to develop accurate forecasts to calibrate your logistic needs. Contact us today to request a quote for logistics solutions.