As channels, markets and consumer segments become more complex and fast changing, we see that companies are increasingly challenged to produce forecasts that get the right inventory to the right location at the right time.
Unfortunately, forecast accuracy for many consumer products and retail companies today is extremely low, with many reporting error rates as high as 50%.(1) When you bet on the outcome of a coin toss, you’ll be right half the time; so it’s no wonder that businesses are desperately looking for better and more reliable forecasting methods.
For top-performing companies, the answer is to adopt demand-driven planning and forecasting (DDPF), a method that monitors and interprets demand in real time, actively shapes it and finds the best response. The benefits can be significant, in terms of both cost savings and revenue. Forecast accuracy can rise by 30% to 35%, inventory reduce by 20% to 25% and revenue increase by 3% to 5%.(2)