Demand variability, inventory shortages, and supply chain interruptions are at the top of the list of challenges facing manufacturers and distributors today. Many businesses are barely keeping up with market fluctuations and consumer demands. Under normal circumstances, understanding where the market is and forecasting where it is heading can be a difficult task.
Sound predictions of demands and trends are more important than ever if businesses are to cope with seasonality, sudden changes in demand levels, price volatility, and large swings of the economy. And having the right data and insights to understand these variables is a crucial first step to successfully navigating these challenges. At Precision, Syndicated Market Insights and Channel Sales Analytics allow our client partners to understand the markets’ changing dynamics, and more clearly understand what channels, categories and segments are prime for optimization.
The Challenges Being Faced
Despite the complex economic conditions, leaders cannot afford to simply weather the storm. While there are indicators that demand is recovering to 2019 levels, lack of supply and raw material costs have risen to the top concerns, causing manufacturers and distributors alike to face a myriad of shared concerns and challenges:
1. Manufacturers are struggling with not only getting the raw materials to manufacture, but then shipping finished goods on time.
2. Distributors are ordering only certain products from manufacturers so meeting minimums and not over- inventorying items that aren’t moving is a challenge.
3. Both are struggling with transportation challenges, with manufacturers importing and shipping from distribution centers and distributors receiving from suppliers and shipping to customers / end-users.
4. Both struggle with inventory management, either not having inventory on items in demand, or being over- inventoried on slower moving items.
Why Address these Challenges Now?
The companies who will emerge stronger are the companies that embrace change. This means not only solving for existing challenges, but also preparing for future change and challenges. By updating outdated forecasting methods and implementing more sophisticated demand and inventory management systems, manufacturers and distributors can improve their business strategies, prepare for future change, and realize immediate return on investment.
According to Gartner, companies that excel at demand forecasting have:
15% less inventory
17% better order fulfillment
35% shorter cash-to-cash cycle times
60% higher profit margins
1/10th the stock-outs of their peers
Thoughts of “shouldn’t I wait for the market to settle?”, or “we have too much going on to tackle these priorities?”, or “I should plan and budget for this next year?” are ever present currently. But as a trusted B2B data partner with a track-record of helping clients uncover revenue and margin enhancement opportunities, Precision has seen that some of the most impactful opportunities are derived from change – programmatically identifying what has changed, how to adapt to it, and then execute to capitalize
Leading manufacturers and distributors are prioritizing the need for good demand forecasting and inventory management, and the need to:
Understand what channels are moving what categories and sub-categories in the right segments
Forecast and hold the right amount of inventory on the right categories/ subcategories
Price correctly to capture market share, increase margin on in- demand items, and price competitively on over- inventoried items
How to Leverage Data for Demand and Inventory Management
When it comes to demand and inventory forecasting, there is no crystal ball. Even with the best tools, it will always be an educated guess. But leveraging data and analytics ensures the educated guess is truly more of an informed projection while minimizing assumptions.
The question for many is how to turn so many data sources, and often unstructured data, into useable information than can inform business decisions?
The answer is to leverage big data analytics to:
-Describe past results
-Diagnose and analyze why past results occurred
-Better predict future trends and plan accordingly
-Recommend actions and next steps to achieve goals
A successful B2B demand planner uses data and descriptive analytics as a basis to understand historical patterns. Market intelligence and competitive analysis is then leveraged to find the total addressable market (TAM). Modeling and predictive analytics should be applied to more accurately forecast demand based on a myriad of variables.
Accurate inventory forecasting starts with a demand forecast. It utilizes what’s already in stock to plan for how much inventory is required going forward. Data collected on usage and buying patterns helps to transition from traditional forecasting based on reorder points, to planning based on actual consumption. This helps businesses optimize stock, continuously reviewing inventory turnover, stock counts, and other trends in customer orders. Without data and insights this process is at best a guess.
As you can see there’s a lot that goes into good demand and inventory forecasting. But the more decision making is based on data, the more accurate a company will be. Precision is a trusted partner helping leading manufacturers and distributors understand where the B2B market is and where it’s heading to assist with supply, demand, and market pricing opportunities.
Precision is a leader in B2B market insights and channel sales analytics. We take great pride in being true partners with our clients, leveraging our rich B2B experience, unique data sources, and proprietary statistical models to help our clients solve complex business problems.