Supply chain disruptions can occur due to sudden fluctuations in demand, which might catch businesses unprepared and struggle to meet consumer demand on time. The rising uncertainty these days has led businesses to predict demand more accurately. This can help businesses to stock their inventories optimally so that order fulfillment can be done efficiently.
The market demand needs to be met instantly to survive in the competitive market as customers do not like to wait for a long time after placing their order. If a business cannot meet the demand at the correct time, it would result in a loss of revenue for the business as customers would shift to the competitors. However, with demand sensing, demand can be predicted accurately for a short period by leveraging advanced technologies such as machine learning and artificial intelligence algorithms.
What is Demand Sensing?
Demand sensing is a scientific method of estimating short-term trends and patterns immediately so businesses can maintain a stock of products in demand in the proper location. Rather than operating according to the same forecast, you can modify the forecast with the newest sales information and make changes that increase the revenue.
Demand sensing utilizes technology to obtain real-time visibility into the transforming demand patterns. The process considers numerous factors that impact demand, such as natural disasters, weather changes, market shifts, and fluctuations in consumer buying behavior. The main aim of demand sensing is to master latency problems by minimizing the time to respond to any unanticipated event. This way, planners can predict short-term changes in demand effectively. Accurate demand sensing can assist in making better business decisions, convenient inventory planning, minimizing operational expenses, and realizing essential business aims.
has been adopted by organizations across different industries but mainly by those who face high sales volumes. Many companies have adopted digitization of the supply chain, which helps them stay ahead of the competition.
Let us have a look at how demand sensing works:
- Demand sensing produces forecasts that consider real-world events such as bad weather, change in consumer trends, and other related social media trends. A viral social media post or a promotion can increase the demand for a particular product.
- Algorithms transform through a significant volume of data to identify which ones have the most excellent effect on demand.
- Companies need to incorporate sell-in data, sell-out data and the correct demand signals for getting a correct picture of consumer demand. The granular sales data, and shipping history should be considered along with the external factors such as weather fluctuations, seasonality, stock market, and so on that influence demand. Other data sources such as customer order data, channel data and PoS data should also be considered.
How Can Businesses Implement Demand Sensing?
As mentioned above, you should utilize demand sensing for multiple reasons. You can enhance reaction time and increase revenue with meaningful insights and analytics. Companies can get positive impacts from demand sensing by implementing it in the following manner.
- Short-term Forecasting with Sell-in Data – The most convenient way for organizations to begin demand sensing is to utilize the most granular historical data available. It generally includes inspecting the regular sell-in/ship-to information related to the supply chain by utilizing short spans and altering the forecast accordingly. This kind of demand sensing includes shipment history, which is readily available in most supply chain planning systems.
- Seasonality and Weather Fluctuations – Seasonality and weather fluctuations are external factors that can influence demand. Seasonal demand is defined as a time series with anticipated patterns of demand owing to re-occuring seasonal events. These trends may re-occur in days, months, weeks, or quarters and should be incorporated during demand sensing. Certain instances of weather fluctuations might spike or lower the demand. This data should also be taken into account for better demand sensing.
- Merge Sell-Out Data – When you work on demand sensing, you must include all the possible and vital data sources you can get to improve the forecasts’ accuracy. Downstream sell-out data such as PoS or channel data, customer data, etc. You can identify the demand patterns, close the reaction time between the plan and what is happening, raise early warnings of problems, etc.
When you infuse all the three aspects together, that is, the sell-in data, the sell-out data and the relevant demand casuals, you can obtain a wholesome picture of the demand. It also offers a basis for highly automated demand sensing that liberates planners from utilizing their business knowledge to improve forecasting accuracy to a different level and enhance customer service.
Companies can obtain multiple advantages from demand sensing. These are listed below.
- Demand sensing allows businesses to predict demand at the granular level and influences important business decisions. It is important to keep the demand forecasts precise and constantly update them. Demand sensing software can identify the right methods of demand sensing and for the appropriate product level while automatically integrating them. It eliminates the need for manual calculations and chooses a proper demand sensing method for ever product.
- With AI-powered demand sensing software, you can consider both the internal and external data that influences demand. Information such as mobility data, economic data, price indices, promotions, markdown data, and so on can be examined and incorporated into the demand sensing outcomes.
- The demand sensing insights make the supply chain more flexible, robust, and resilient. Businesses can adapt to market volatility and fluctuations more effectively.
- Improved inventory planning can be achieved with demand sensing. Regular demand data can help stock inventory optimally, minimize stock levels and make the supply chain more efficient. It can effectively reduce excess production, storage, and handling costs.
About Fountain9
Fountain9 offers assistance to businesses to estimate demand accurately with their demand sensing software, Kronoscope, which utilizes nine unique factors that impact demand. Companies can improve their customer service levels and satisfy consumer demand effectively on time by stocking their inventory to optimal levels with demand sensing insights.
@gagan@eseosolutions.com this blog needs work its not written correctly, please refer to the previous ones written blog on the same topics
_Assigned to Gagan Pratap_
what is the keyword Demand Sensing or Demand Sensing Software
add
1) ability to predict demand accurately at the most granular level
2) include factors such as seasonality, promotions, pricing etc.