Why do I need to forecast?
There are a number of reasons why forecasting is so important – some very obvious and others not so:
More time means less stress – One key benefit of good forecasting is that it will simply make your life easier. And not just that, it will make life much better for your suppliers, your warehouse teams, the ship liners you use, and others who support you – like us at Twill – because they will be able to plan and prepare for your needs.
Keep your customers happy – The best way to keep your customers happy is giving them the product they want when they want it. Forecasting the demand you expect for your product means you can ensure that the right products always have the right stock levels.
Cost-efficiency – There are a number of ways in which good forecasting can improve your cost-efficiency. For example, by identifying stock that is not selling, or is obsolete, you can remove it from your warehouses and future planning. This brings the cost for keeping these products down. Forecasting your shipments in advance will also allow you to secure better rates – instead of urgently booking shipments and potentially having to pay significantly more. Once again saving costs for you.
How do I forecast better?
So now you know why forecasting is so essential – how do you could you make sure you are doing it right? And how can you do it better?
Give yourself time – Time is your greatest friend in this business, so give yourself as much as you can. At Twill we always look to help our customers if they have to make an urgent shipment but ultimately we get the best rates and deliver the best service when we know about your needs well in advance.
Be aware of peak periods – It is important in your forecasting to understand the peak periods when rates or demand may be subsequent to change – these include dates such as Chinese New Year and Christmas, but there may be others – so build them into your work.
Use data – Forecasting can be as simple as an excel spreadsheet – but when utilised well it can give great insights into your customers’ needs or trends within your products. Use all the data you have available to you to inform your forecasting and help make insightful decisions.
Use the right type of forecasting – In the context of a supply chain there are a few key types of forecasting: Demand, Supply and Price. It’s important to see how each could benefit you. Demand forecasting, for example, will help you see which of your products is in demand currently and looking ahead. Supply forecasting, however, will help in understanding the trends around you (technological, political etc.) that may affect supply. Price forecasting is based on data gathered on both demand and supply – which then provides a prediction of short and long term prices and can give you insight into the reasons for those trends.
Forecasting has the potential not just to make your life easier, but if done correctly, it could help you make serious savings and increase your revenue by helping you spot trends and generally understand your market better. It may take some time to get your forecasting established – but the potential benefits are certainly worth the work.
-Lina Hu, Twill Customer Care