Demand Forecasting - Building a Healthy Inventory

Demand Forecasting is a critical component to success in the Wine, Beer & Spirits industry. 

The article below by Robert Byrne, Terra Technology, points out the critical importance of accurate demand forecasting in optimizing inventory management:

The success of Inventory Optimization and Supply Chain visibility ultimately depends on an accurate Demand Forecast.  Behind every strong supply chain is a healthy inventory that carefully balances service with cost: too much stock ties up valuable working capital that could otherwise be used to grow the business, while too little stock compromises service objectives and impairs revenue growth.  Striking the right balance is the key to achieving long-term profitable growth and is especially important in Asia where volatile markets and changes in consumer demand continually challenge manufacturers.

The first step towards creating a healthy inventory is to improve forecast accuracy. While customer behavior has always been hard to predict, major demographic shifts underway in Asia are making it even harder. With markets expected to double in size within 30 years, the concept of using historical sales to predict demand has become increasingly irrelevant. Leading multinational manufacturers have abandoned this approach in Asia and are now looking at current data from within their supply chains to sense demand – and in some cases, even peeking into their distributors’ networks. The use of current data to sense demand significantly improves forecast accuracy.

Read the full article appearing in Supply Chain Asia, 7/8/14, at link below: