Defining Demand Forecasting Demand forecasting as the term suggests is predicting the need for a...
The need for forecasting is probably as old as human history is. Ancient maritime navigation would be based on the knowledge of seasonality and weather forecasts. While we have advanced as a race, the need for forecasting has remained steady if not increased but the techniques have vastly evolved owing to our knowledge of mathematics.
In the field of retail, sales forecasting is helping business achieve a clear competitive advantage. In particular in consumer oriented markets like fashion and electronics market demand is often uncertain and product life cycles are short thereby making forecasting more challenging.
The impact sales forecasting on success and performance of companies is crucial. Inaccurate forecasts can lead to stock-outs or over stock and lead to spiralling losses for the business. Specifically longer time-to-market means that production plans have to be submitted much before future demand is known. Factors as varied as weather, holidays, economic situation, public events all have an impact on demand. Moreover in case of fashion the SKUs are usually replaced end of the season thereby making for a very dynamic product portfolio.