Top Strategies for Optimizing Customer Service Levels with Demand Forecasting
Demand forecasting has grown to become one of the most important components of any supply chain. With supply chains spread across the world, managing it has become much more complicated. We saw its effect during the Covid-19 pandemic when the global supply chain was at an abrupt halt.
Post-2020, digital demand chain management gained a lot of traction. Today many businesses maintain their demand chains digitally. However, it takes more than a spreadsheet to truly digitize supply chain management.
AI and demand forecasting
Artificial intelligence (AI) has made steady inroads into various aspects of commerce. Today many tools we use — for marketing, sales, distribution — are AI-based. However, AI has not had the same impact on supply chain management. Fortunately, now we are taking steps in that direction.
That brings us to the question — what role does AI play in supply chain management and demand forecasting? To put it simply, it uses algorithms to calculate demand. Most of us are aware of how social media platforms like YouTube and Instagram use AI to provide curated content. In a similar fashion, AI helps us better judge which components or units would be high in demand.
How businesses can lose money due to mismanaged supply chain
Businesses can lose money in a number of ways. One of the most common ways is mismanaged supply chains. When the supply chain is not managed well, businesses can lose money in multiple ways.
Among other things, businesses can lose money by not being able to meet demand. Not being able to meet demands also gives businesses negative brand awareness. If it continues to be like that for a prolonged period, it will be very difficult to recover. For businesses that depend on different components to deliver finished SKUs, the effect will be even more.
How demand forecasting helps in supply chain management
Demand forecasting makes it possible for enterprises of sizes to predict accurately which units would be in high demand in the coming days. Most importantly, this prediction is not founded on gut feeling or guesswork. AI-based demand forecasting tools deal with numbers and stats. As a result, the predictions you get are calculated and measured. The chances of it being off-track are much lower than manual demand forecasting. Businesses that are not using AI-based demand forecasting are losing out on significant potential gains.
Why SMEs should digitize supply chain management
For small and medium enterprises, digitizing the supply chain is even more important. First, small and medium businesses often do not have a huge hold on the supply chain. They cannot control many of the factors that go into supply chain disruption. Apart from that, small and medium businesses do not have the labor power that can get them through a demand chain catastrophe.
Small to medium businesses will benefit greatly by digitizing their supply management. It will help them compensate for the lack of human and capital power. Large businesses can often overcome these problems with capital alone. SMEs do not have that privilege and have to adapt accordingly.
Advantages of AI-based demand forecasting and digital supply chain management
By now, you must have understood that AI-based demand forecasting is the future of supply chain management. But before that, we need to understand exactly what the benefits are.
The primary benefit is accuracy. AI has proven to be much more accurate than humans when it comes to calculations and analysis. When using AI for supply chain management, businesses can get much better results with much less investment.
Another key advantage of digitizing the supply chain is cross-platform management. Many businesses now operate from different physical locations. By having a digital supply chain management system, businesses can easily overcome the restriction of physical proximity.
What we often overlook about AI is consistency. AI-based demand forecasting is extremely consistent and does not fall victim to human sentiments and biases.
Conclusion
As you can see, AI is no longer restricted to high-end technological innovation or research. Today it is a real force in the world of business. Small and medium businesses are particularly benefiting as AI becomes more accessible. If you are not yet making the most of it, it’ll be too late before you know it.
For more articles like this, visit stocktrim.com.
