We are running our businesses in a world that is very unexpected. Things can go well for years and suddenly you have to face some crisis. The COVID-19 pandemic is a prime example of an unexpected crisis that has impacted almost every business. Demand forecasting becomes integral during the crisis. However, you will have to transform the conventional rules of demand forecasting during the crisis.
Today, we will tell you about the key demand forecasting rules during the crisis. Knowing these rules will help you understand the demand for your products in the upcoming days. Moreover, it also helps you keep your business running even in a crisis. Let’s explore these rules without further ado.
Top 6 Demand Forecasting Rules During a Crisis
There are 6 major rules you need to keep in mind when forecasting the demand for your products during the crisis. These rules are listed below. Let’s go through them.
Rule 1: Regular Forecasting
When everything is going well in the market, you can forecast the demands once or twice. Then plan everything accordingly as the chances of deviations in predictions are low. However, during the crisis, the trends shift rapidly and your predictions may not be accurate.
To deal with this situation, you need to follow the first rule, regular forecasting. By following this rule, you have to forecast the demand for your products after regular intervals. The intervals will be kept very short so that you can easily make predictions based on rapidly changing trends.
Rule 2: Planning for Unexpected Scenarios
Demand forecasting helps you predict the future of your company’s sales. On regular days, the predictions you make don’t deviate a lot. However, during the crisis, you never say what might just happen. The market can crash in a few hours. Therefore, you need to be ready for unexpected scenarios. This is the 2nd rule of demand forecasting in the crisis.
When forecasting the demand for products, be sure to consider unexpected scenarios as well. By doing so, you will be ready to deal with such situations. Your forecasting needs to be agile to plan for such scenarios.
Rule 3: Risk Mitigation
Numerous risks will be associated with the supply chain during the crisis. These risks need to be mitigated to keep your business growing. You can do so by predicting the potential risks during demand forecasting.
The forecasters you have must be capable of understanding the risks and incorporating them into their forecasting models. By doing so, you can have an idea about the risk scenarios and can develop strategies to mitigate them. Forecasters must consider factors like logistic challenges, distributor disruptions, and geopolitical factors to incorporate risks into demand forecasting models.
Rule 4: Adopt Technology
This is an era of modern technology. Sticking to the traditional approaches and not leveraging the power of modern technology is not a wise choice. Therefore, the next rule is to adopt the latest technology. You need to get help from advanced tools, AI, automation, and machine learning for demand forecasting in a crisis.
Using the latest technology will help you forecast the demands quickly. Apart from. that, it also gives you more accurate results in turbulent times.
Rule 5: Flexible Inventory and Order Management
Demand forecasting is directly linked to the inventory and order management systems. Rigid order or warehouse management will not be a good option during the crisis. Therefore, the 5th rule you must follow is to make your warehouse and order management system flexible. This flexibility will help you update stocks and fulfill orders quickly based on changing trends.
Rule 6: Continuous Learning
You cannot do everything at once. You always need to learn some new things to keep your business growing. Therefore, demand forecasting in the crisis demands you to learn new things as well. You need to learn continuously to ensure that you start making better predictions in the crisis as well. Along with learning, keep adopting the new strategies as well.
Takeaway
Demand forecasting during the crisis can be a tricky subject but not when you adhere to the aforementioned rules. By following these rules, you can enhance the accuracy of your predictions. Apart from that, it will also improve responsiveness as well.
Today Business Times