Demand Sensing - Much More Than a Demand Management Evolution

“Demand sensing” has become increasingly important over the past few years. Why?

Because companies believe that improving demand forecast accuracy can drive higher levels of customer service through better shelf inventory availability while simultaneously decreasing overall inventory costs and increasing profits.

Furthermore, evolving consumer behavior and rising market volatility have underscored the opportunity to sense and react in near real-time to changes in the demand and supply network.

Yet these shifts have also fully exposed the limitations of our traditional forecasting techniques.

So what is demand sensing? Simply put, it is a next generation forecasting methodology that greatly improves current levels of forecasting by employing an updated set of mathematical techniques which are designed to analyze daily demand information, thereby creating a much more accurate forecast of near-term demand based on the current realities of consumer sell through.

This jump in forecast accuracy helps companies manage the effects of market volatility and gain the related benefits of a demand-driven value network, including more efficient operations, increased service levels, and a range of financial benefits including higher revenues, improved profit margins, decreased inventory levels, better order performance and a shorter cash-to-cash cycle time.

The principles of demand sensing discussed in this paper apply across industries and more directly to any company participating in a supply network, including retailers, manufacturers, suppliers, or carriers.