Market-Driven Demand Management Advantage

DRIVING THE MARKET-DRIVEN DEMAND MANAGEMENT ADVANTAGE 

Market-driven demand management is supported by demand-driven forecasting principles that have a significant impact on a company, whether the company sells products or services. Companies that have implemented a market-driven forecasting process have experienced four key benefits  

Supply chain technology adoption has always been slowed by issues with scalability, data cleanliness, and the sheer volume of data. Today s technology makes this no longer an issue. 

FVA uses standard forecast performance measurements (metrics) to identify value-added or non-value-added activities in the process that contribute to the accuracy or inaccuracy of the demand forecast. The result is a mechanism that reduces non-value-added touch points, thus improving the overall accuracy. Companies that have successfully implemented FVA have experienced significant improvement in overall forecast accuracy and reduced cycle times. If an activity does not improve the accuracy of the statistical baseline forecast, it should be eliminated, or minimized (simplified), to reduce cycle time and resources. 

It is also good practice to compare the statistical forecast to a naive forecast. (The naive forecast is a simple technique where the forecast equals the volume of goods sold in the prior forecasting period.) Naive forecasts, in some situations, can be surprisingly difficult to beat, yet it is very important that the organizations ensure that software and a statistical modeler improve on the naive model. The focus needs to be on continuous improvement. If the software, modeler is not able to do this, it makes sense to implement better software, improve the skills of the modeler, or just use the naive model as a baseline forecast. 

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