Demand forecasting has always been important. In past years, this has been done with a combination of statistical data as well as intuition. No one knows your business and area better than you do. Your customers will notice when you are in tune with anticipating their needs and have the products and services they need available at a certain time.
Therefore it is essential to analyze the numbers effectively to make decisions. Looking at how many people made which purchases on which day can give you an idea of what you need next year. However, there are also many variables to take into consideration. These variables have increased exponentially thanks to the current pandemic.
Demand forecasting has become more important than ever in the age of Covid-19. Historical norms have proven ineffective in forecasting demand in this changing landscape, it is time for demand forecasting to become more effective and resilient. The struggles of the pandemic have impacted which products and services are in demand. Tight budgets, limited resources, and many other variables are also affecting demand. There are lockdowns, travel bans, and social distancing rules in place all over the country. Events are heavily regulated and it is also a question of how many people are actually following the rules.
It is truly difficult to know how all of these factors will trickle down and influence demand. However, it can be helpful to set up a data nerve center under the direction of the chief data officer. Data science models can more accurately answer questions about what is going on than human reasoning. With these models, companies can factor in such things as health implications, natural disasters, severe weather, and more. This can be combined with historical data and seasonal implications so so that better models can be made.
Models can be trained to look for spikes due to causal factors. For instance, a popular sporting event happening nearby can drive up the number of customers stopping into a store and making certain purchases. School breaks can increase travel, and predicted severe weather can cause an increase in buying before the storm hits and a decrease in buying while people are braving the storm at home.
Covid-19 is introducing a huge number of new variables to each company’s demand forecasting. Information and strategies need to adapt to what is currently going on. This means taking the time to look at demand anomalies and keeping track of the recovery rate seen in your company from dealing with the virus. There are ways to predict the recovery of your company and meet changing demands and business returns to regular numbers. This is important to dial in on so that your business can be prepared for the future.