Basic Approach to Demand Forecasting

The following five points are important for an organization to forecast effectively  

Integrate d and planning and forecasting throughout the supply chain. 

Identify the major factors that influence the demand forecast. 

Every forecast supports decisions that are based on it, so an important first step is to identify these decisions clearly. Examples of such decisions include how much of a particular product to make, how much to inventory, and how much to order. All parties affected by a supply chain decision should be aware of the link between the decision and the forecast. For example, Walmart s plans to discount detergent during the month of July must be shared with the manufacturer, the transporter, and others involved in filhng demand, as they all must make decisions that are affected by the forecast of demand. All parties should come up with a common forecast for the promotion and a shared plan of action based on the forecast. Failure to make these decisions jointly may result in either too much or too httle product in various stages of the supply chain. 

Integrate Demand Planning and Forecasting Throughout the Suppiy Chain 

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