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In the new IT-ready workplace, businesses really have no excuse to ignore the obvious benefits that demand forecasting brings. What do you do when it starts to rain? Just hope it stops soon or reach for that demand forecasting-shaped umbrella?

Enabling greater control, longevity and productivity, demand forecasting helps to reduce costs in quiet periods and increase productivity in the busy periods. As part of this, it’s clearly critical to have the right software in place that can allow you to implement an appropriate demand forecasting solution.

However, software is only one part of the puzzle. You can’t think that just because you’ve bought this new software all your problems are solved – there’s more to it than that.


In times when budgets are unstable and the market is constantly evolving, ensuring business stability is key. Forecasting is a critical technique to help organizations continue to run as usual through periods of fluctuating demand.

After all, the impact of poor planning can be disastrous for an organization – poor cash flow could damage supplier relationships, inaccurate IT resource planning might impact service delivery, or lack of resources could even result in unfinished products.


It is clear, then, that demand forecasting is advantageous, and in order to move forward you need the appropriate software, but what next?

As mentioned, it’s not just about the technology, although of course finding the appropriate software is critical and you need one that works for you and your business.

The next question though is where? Where and what are you going to demand forecast.

Let’s say you have a multi-level Bill of Materials that has five levels including several common base units lower in the structure at level three.

It can seem tempting to forecast the top level but this means you leave yourself exposed further down the chain. What’s important here is rationalizing your structure – it might be best for your business to demand forecast at level two or three.

Rather than demand forecasting on the end unit, in order to get a true competitive advantage, it may work better to forecast on the base unit. Each business will have different priorities and goals, but you need to find the most suitable level to do it for you.


You need to think a little outside the box when coming up with your tailored demand forecasting plan as there is no one size fits all policy here.

A business almost needs to approach this backwards, thinking what do I actually want to achieve as a company? Are you focused on pure revenue growth, or are you looking to expand into a different sector or region?

You don’t just want a simple out of the box solution that tells you what happened in the past and attempts to predict what will happen in the future.

We all know how volatile the market can be, especially with disruptive technologies coming into play and changing the way people work and how whole industries function.

With this in mind it’s almost impossible to try and apply statistics on history because you can’t say with any real certainty that external pressures will be the same this year as they were last year.

One way to avoid falling into this trap is by involving as many people as possible in working out what the forecast is.

This could involve giving some of your main customers the insight into what you’re planning, which might seem alien but try picking a friendly customer, showing them your plans and asking them what their plans and priorities are for the next year.

They might have plans that will affect your demand forecasting and it gives you an opportunity to demonstrate how you are actively tailoring your business strategies to align with theirs.

In the current day when the world is getting smaller, external collaboration is a great way to ensure everyone is aligned and there are no nasty surprises.

Planning needs to become more bottom up than top down, where an idea can be imposed that is at odds with current activity and goals.


It’s never too soon to start thinking about demand forecasting. However to get it right, you need to really focus on what’s already been discussed.
Energy Data Build a plan that takes into account all your data and the moving parts of your organization.

The more thought you put into demand forecasting the more benefits you will reap.

And soon your business can run like the well-oiled machine that it has the potential to be.

(First published in The Manufacturer on September 30, 2015.)

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