The Magic of Predicting Demand from Data

Strategy+Business, Philipp Berttram, Judith Schneider, and Marc Münch

Demand sensing is a key element of a real-time, connected supply chain ecosystem and can kick-start digital transformation. Demand sensing allows companies to get closer to the consumer by creating a better understanding of consumer behavior and its implications for the supply chain, at a time when almost all businesses face unprecedented volatility. That is particularly important when one considers the changing consumer expectations for services such as instant order fulfillment.

The result is that companies get products to consumers faster, deliver consistently excellent service, increase sales, and ensure that few, if any, unsold products are returned to suppliers. Demand sensing also enables a real-time, connected supply chain ecosystem, reducing errors in forecasting by up to 45 percent, in our experience, resulting in greater efficiency, better reliability, and increased consumer satisfaction.

Demand sensing’s time has come thanks to the availability of new data sources impacting demand, increased computing power, and artificial intelligence. Companies are using this access to new data and building up demand sensing capabilities to better understand consumer behavior and orchestrate their supply chains accordingly. One example of a company calling on an outsourced solution is Procter & Gamble, which has used demand sensing for several years. It draws on information such as point-of-sale (PoS) data, channel inventory, warehouse stock movements, data from distributors, and forecasts from retailers, all of which is fed daily into an analytics model.

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