Project Report on

Demand Forecasting
Submitted By: - Sanjay Sharma
Submitted To:-Dr Himamshu Sharma
Masters of Business Administration 1st Sem

TABAL OF CONTENTS
S.NO TOPIC PAGE NO
1 What is Demand Forecasting 3

2 Need of forecasting 4
3 Benefits of Forecasting 6

4 Timeline of Demand Forecasting 7

5 Models for forecasting 9
6 Selecting the right forecast model 12
7 Factors influencing the customer demand 13
8 Demand forecasting software 14

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 9 Demand forecasting in Coca-Cola 16
10 Demand forecasting in Apple 17

11 Demand forecasting in Toyota 18

12 Demand forecasting in Amazon 18

13 Conclusion 19
14 Bibliography 20

What is Demand Forecasting

The process of analyzing and understanding current and past information to understand the
future patterns through a scientific and systemic approach is called forecasting. And the process
of estimating the future demand of product in terms of a unit or monetary value is referred to as
demand forecasting.Demand forecasting is, in essence, developing the best possible
understanding of future demand. In practice, this means analyzing the impact of a range of
variables that affect demand—from historical demand patterns to internal business decisions and
even external factors—to increase the accuracy of these predictions. Accurate demand forecasts
can be leveraged throughout retail operations to improve decision-making and outcomes in areas
such as store and distribution center replenishment, capacity planning, and resource planning.

Demand forecasts can be developed on different levels of granularity—monthly, weekly, daily,

or even hourly—to support different planning processes and business decisions, but highly
granular forecasts are always extremely valuable. The benefits of a granular forecast are obvious
when thinking of fresh food products whose short shelf-lives sometimes call for intra-day
forecasts at the product-location level to prevent spoilage.

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 Even if the day-product-location level forecast for a slow-moving item is itself somewhat
inaccurate, forecasting at this level of granularity ultimately makes it easier to aggregate demand
—whether for different periods of time, across products (for example, total demand per product
per distribution center), or by total order lines per DC per day, etc.

To effectively execute store replenishment, capacity planning, and other business decisions,
retailers need multiple forecasts with different levels of granularity that look at different time
spans. This is why flexible aggregation across products or over different planning horizons is
critical to a retailer’s ability to leverage the same demand forecast in all their retail planning.

According to  Heizer and Render,“Forecasting is considered art and science of estimating

future events”. It is defined as an art because to improve the correctness of forecasts, it is
required to have subjective assessment along with a contemporary and historical judgment. It is
also considered a science because lots of scientific methods are used to have different numbers
and further analysis is done through mathematical models to determine the correctness of the
forecast.

According to Louis Allen , “ forecasting is considered a systematic attempt to probing the

future through inference from facts that are already known”

According to Cundiff and Still, "Demand Forecasting is an estimate of Demand during a

specified period. Which estimate is tied to a proposed marketing plan and which assumes a
particular set of uncontrollable and competitive forces"

According to Evan J. Douglas, "Demand forecasting may be defined as the process of finding
values for demand in future time periods."

Need of forecasting

Helps set goals and plan

Forecasting allows businesses set reasonable and measurable goals based on current and
historical data. Having accurate data and statistics to analyze  helps businesses to decide what
amount of change, growth or improvement will be determined as a success. Having these goals
helps to evaluate progress, and adapt business processes where needed to continue on the desired
path. There are certain tools such as CRM which will be discussed later in this blog that help to
visual forecasting and give insight into things like the sales pipeline, opportunities, and more.

Financial Planning

Having visibility into potential trends and changes help businesses to know where to allocate
their budget and time spent on certain offerings such as products, services, or areas internally
such as hiring and adjusting strategy. “Budgeting quantifies the expectation of revenues that a

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business wants to achieve for a future period, whereas financial forecasting estimates the amount
of revenue or income that will be achieved in a future period”.

Sales forecasts are driving force in budgeting. Sales forecasts provide the timing of cash inflows
and also provide a basis for budging the requirements of cash outflows for purchasing materials,
payments to employees and to meet other expenses of power and utilize etc. Hence forecasting
helps finance manager to prepare budgets taking into consideration the cash inflow and cash out
flows.

Having insights into current business functionality along with later predicted trends and
combining this information into meaningful insights makes for a better allocated and estimated
budget

Helps anticipate change within the market

Having insight into not only current data but projections of what could happen in the future helps
businesses to make adjustments to business strategy and alter current operations in order to
change their outcome.

Forecasting helps position businesses to become active instead of reactive. If there is a trend that
is predicted to take over the market, or data is showing changes in consumer behavior it is
important to readjust to the market overall and optimize resources to stand out from the
competition.

Customer Relationship Management 

Many comon True CRM Solutions come with an integrated forecasting module, this can be used
to create forecasted sales reports; enabling sales teams to fine-tune their selling strategy. Sales
Representatives can gain visibility into items such as their quotas at any given moment, while
Sales Managers can make more informed business decisions on how their team should manage
its resources. 

Business Intelligence

Business Intelligence takes raw data in real-time and turns it into valuable and reliable
information. This provides businesses the ability to make informed business decisions, faster.
These integrated solutions are able to provide you with historical, current, and future data. BI
tools use this data to create reports, summaries, dashboards, maps, graphs, and charts, providing
detailed insights into business processes.

Today, big data and artificial intelligence have transformed business forecasting methods and
they are continually evolving according to business needs and technology. As companies become
more data-driven, efforts to share data and collaborate increases. A business intelligence system
offers an effective way of acquiring the data that you need for better forecasting; with better
forecasting comes a more efficient, productive, and cost-effective business.

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Making timely and informed decisions is critical to running a business. However, many
organizations struggle to keep up with the growing amount of data being collected. Business
intelligence facilitates and improves decision making based on real-time information while
reducing complexity and costs related to data analysis and reporting. Below is an example of a
dashboard in Sage Enterprise Intelligence, reporting on real-time data within an organization.

Economic Planning

Forecasting helps in the study of macroeconomic variables like population, total income,
employment, savings, investment, general price-level, public revenue, public
expenditure, balance of trade, balance of payments and a host of other macro aspects at national
or regional levels. The forecasts of these variables are generally for a long period of time ranging
between one year to ten or twenty years ahead. Much would depend on the perspective of
planning, longer the perspective longer would be period of forecasting. Such forecasts are often
called as projections. These are helpful not only for planning and public policy making, they also
include likely economic environment and aid formulation of business policies as well.

 Workforce Scheduling

The forecast of monthly demand may further be broken down to weekly demands and the
workforce may have to be adjusted to meet these weekly demands. Hence, forecasts are needed
to enable managers to get tuned with the workforce changes to meet the weekly production
demands.

Decisions Making

The goal of the forecaster is to provide information for decision making. The purpose is to
reduce the range of uncertainty about the future. Businessmen make forecasts for the purpose of
making profits. In business forecast has to be done at every stage. A business man may dislike
statistics or statistical theories of forecasting, but he cannot do without making forecasts.
Business plans of production, sales and investment requires predictions regarding demand for the
product, price at which the product can be soled and the availability of inputs. The forecast about
demand is the most crucial. Operating budgets of various departments of a company have to be
based upon the expected sales. Efficient production schedules, minimization of operating cost
and investment in fixed assets is when accurate forecasts recording sales and availability of
inputs are available.

Controlling Business Cycles

It is commonly believed that business cycles are always very harmful in their effects. Abrupt rise
and fall in the price level injurious not only to businessmen, but to all types of persons,
industries, trade, agriculture. All suffer from the painful effects of depression. Trade cycle
increase the risk of business; create unemployment; induce speculation and discourage capital
formation. Their effects are not confined to one country only. Business forecasting reduces the
risk associated with business cycles. Prior knowledge of a phase of a trade cycle with its
intensity and expected period of happening may help businessmen, industrialist, and economists

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to plan accordingly to reduce the harmful effects of trade cycle’s statistics is thus needed for
the purpose of controlling the business-cycles.

Benefits of Forecasting

Inventory or Material Management

Predicting demand or orders of products may lead to achieving an optimum level of inventories
by reducing the shortage or surplus inventory of both raw material and finished goods. Through
forecasting, manufacturing organizations can get clarity of situations related to supply and this
further helps them in evaluating the customer demand level in more accurate form according to
the volume of components required to fill orders in a successful way.  The reduction in inventory
results in reducing warehousing and helps organizations smooth their operations by removing
losses that are costly by reducing the time in which the unused inventory is kept in the
warehouse.

Improve Employee Relations

Forecasting promotes active participation and coordination of staff members in the process of
forecasting. So, it initiates better employee relations through teamwork and unity.  Different data
and information is required in forecasting from various internal and external sources and
employees at different levels collect such information through different resources. This demands
all verticals and functions of an organization to participate in the forecasting process and thus,
allowing improved coordination and communication between employees.

Better Utilization of Available Resources

Using forecasting, organizations ensure optimum utilization of their available resources such as
capital, manpower, material, and other resources by identifying the weak areas and giving
required information related to the future. This helps the management of the organization to
focus on and control critical areas.

Improve Customer Satisfaction

Better customer service leads to customer satisfaction which demands offering customers the
right products/ services in the right quantity and at the right time. Using forecasting to enhance,
refine, and streamline different functions of an organization such as operations, logistics, and
production; helps in increasing customer satisfaction level.

Timeline of Demand Forecasting

The three classification categories in relation to the time horizon are:

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1. Long-term planning – strategic

Issues addressed at the strategic planning level include new markets and distribution channels,
investment in production capabilities, new storage and logistical capacity, supplier agreements,
and introduction of new products. The time horizon is typically 1 – 5 years, and the frequency of
the review meetings quarterly.

 Demand/product review – Here you are looking at demand at an aggregated level.

Competitors and general market conditions are assessed, and any new product lines and
markets are discussed. Other questions addressed may include: ‘Should we change the
product/market mix?’ and ‘What would this do to our overall supply chain cost and
profitability?’
 Supply review – Questions here may include; ‘How are our suppliers performing?’,
‘Should we sign up new or alternative suppliers?’ and, ’Are more profitable supply
options available?’
 Capacity review – The capacity review looks at different demand and capacity scenarios
and tries to identify the most profitable ones. Questions may include ‘Considering the
demand review, do we need to change anything production-wise?’, ‘Do we need to add a
production line?’,’ What kind of productivity improvements should we introduce and
what would be the cost?’, ‘Should we outsource part of the production?’,’ Should we
build another warehouse?’ ‘Should we consolidate warehouses, and if so, where?’

2. Medium-term planning – tactical

Tactical planning typically addresses shift patterns, forecast performance, operational

performance issues, short-term storage issues, capacity issues that could require overtime or
casuals, projected stock on-hand, stock expiry issues, supplier reviews, and product/customer tail
decisions. The time horizon here is usually in the 2 – 12 month range, with monthly review
meetings.

 Gross profit review – The key focus of Integrated Business Planning (IBP) is profit, and
all medium-term planning review meetings should therefore also be based around profit.
Remember to look at your demand, revenues, and supply chain costs for the entire
planning horizon. This is necessary to get a proper rolling profit view.
 Demand review – The tactical demand review will look at questions such as
‘Considering our current business constraints, are we meeting all demand?’, ’If not, what
should we drop to maximize profit?’,’ How accurately are we forecasting?’
 Product review – Here you consider, ‘Do we need to review the product/market tail?’,
‘How much of the tail should be cut?’, ‘Where is the optimal cut from a profit point of
view?’, as well as reviewing new product introductions.
 Inventory review – All of the following need to be considered from a profit
maximization point of view, ‘What is our projected inventory profile?’, ‘Do we have any
expiry date issues?’, ‘Are we overstocked?’, ‘Do we have any sales opportunities?’,
‘Should we consider running promotions?’, ’Should we re-distribute inventory across our
network to meet demand more cost-effectively?’ and, ‘Are we optimizing safety stock?’

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 (By the way, if you are interested in this topic, you may want to look at the white paper:
Setting the Optimal Safety Stock.)
 Operations review – On the production side, you will look at lead-time vs. capacity
issues, such as, ‘What is the ideal number of shifts for the next planning period?’ and,
‘Are we optimizing the utilization of our resources and assets?’
 Supply review – Consider, ‘How are we tracking to our supplier agreements?’, ‘Are we
optimizing logistics between supply points?’ and,  ’Are our supply batches correctly
sized?’

3. Short-term planning – operational

The main aim of operational planning is to balance demand and supply. The focus is on load
balancing, shift schedules, batch size optimization, short-term promotions, stock expiry date
issues, and supply adjustments. The time horizon for this tends to be 1 – 12 weeks and with a
review meeting frequency of 1-2 times a week.

 Demand review – The topics addressed here tend to be quite similar to those discussed
in the tactical reviews, just with a shorter time frame focus. ‘Considering the current
constraints, are we meeting all demand?’ and, ’If not, what should we drop to maximize
profit?’
 Inventory review – Again, very similar to the tactical planning review meetings.
Questions discussed may include, ‘What does our projected inventory profile look like?’,
‘Do we have any expiry date issues?’, ’Are there any additional sales opportunities?’ and,
‘Should we consider running in-store promotions?’
 Operations review – On the production side, you will need to look at lead-time vs.
capacity. ‘Do we need to prepare for overtime?’,’ What are the optimal production batch
sizes for the next few weeks?’ and, ‘What is the optimal number of shifts we should run
over the next planning period?’

Models for forecasting

To handle the increasing variety and complexity of managerial forecasting problems, many

forecasting techniques have been developed in recent years. Each has its special use, and care
must be taken to select the correct technique for a particular application. The manager as well as
the forecaster has a role to play in technique selection; and the better they understand the range
of forecasting possibilities, the more likely it is that a company’s forecasting efforts will bear
fruit.

The selection of a method depends on many factors—the context of the forecast, the relevance
and availability of historical data, the degree of accuracy desirable, the time period to be forecast,
the cost/ benefit (or value) of the forecast to the company, and the time available for making the
analysis.

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 These factors must be weighed constantly, and on a variety of levels. In general, for example, the
forecaster should choose a technique that makes the best use of available data. If the forecaster
can readily apply one technique of acceptable accuracy, he or she should not try to “gold plate”
by using a more advanced technique that offers potentially greater accuracy but that requires
nonexistent information or information that is costly to obtain. This kind of trade-off is relatively
easy to make, but others, as we shall see, require considerably more thought.

Successful forecasting begins with a collaboration between the manager and the forecaster, in
which they work out answers to the following questions.

1. What is the purpose of the forecast—how is it to be used? This determines the accuracy and
power required of the techniques, and hence governs selection. Deciding whether to enter a
business may require only a rather gross estimate of the size of the market, whereas a forecast
made for budgeting purposes should be quite accurate. The appropriate techniques differ
accordingly.

Forecasts that simply sketch what the future will be like if a company makes no significant
changes in tactics and strategy are usually not good enough for planning purposes. On the other
hand, if management wants a forecast of the effect that a certain marketing strategy under debate
will have on sales growth, then the technique must be sophisticated enough to take explicit
account of the special actions and events the strategy entails. Techniques vary in their costs, as
well as in scope and accuracy. The manager must fix the level of inaccuracy he or she can
tolerate—in other words, decide how his or her decision will vary, depending on the range of
accuracy of the forecast. This allows the forecaster to trade off cost against the value of accuracy
in choosing a technique. Once the manager has defined the purpose of the forecast, the forecaster
can advise the manager on how often it could usefully be produced. From a strategic point of
view, they should discuss whether the decision to be made on the basis of the forecast can be
changed later, if they find the forecast was inaccurate. If it can be changed, they should then
discuss the usefulness of installing a system to track the accuracy of the forecast and the kind of
tracking system that is appropriate.

2. What are the dynamics and components of the system for which the forecast will be made? This
clarifies the relationships of interacting variables. Generally, the manager and the forecaster must
review a flow chart that shows the relative positions of the different elements of the distribution
system, sales system, production system, or whatever is being studied. Once these factors and
their relationships have been clarified, the forecaster can build a causal model of the system
which captures both the facts and the logic of the situation—which is, after all, the basis of
sophisticated forecasting.

3. How important is the past in estimating the future? Significant changes in the system—new
products, new competitive strategies, and so forth—diminish the similarity of past and future.
Over the short term, recent changes are unlikely to cause overall patterns to alter, but over the
long term their effects are likely to increase. The executive and the forecaster must discuss these
fully.

Qualitative techniques

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 Primarily, these are used when data are scarce—for example, when a product is first introduced
into a market. They use human judgment and rating schemes to turn qualitative information into
quantitative estimates.

The objective here is to bring together in a logical, unbiased, and systematic way all information
and judgments which relate to the factors being estimated. Such techniques are frequently used
in new-technology areas, where development of a product idea may require several “inventions,”
so that R&D demands are difficult to estimate, and where market acceptance and penetration
rates are highly uncertain. Estimates of costs are approximate, as are computation times,
accuracy ratings, and ratings for turning-point identification. The costs of some procedures
depend on whether they are being used routinely or are set up for a single forecast; also, if
weightings or seasonal have to be determined anew each time a forecast is made, costs increase
significantly.

Time series analysis

These are statistical techniques used when several years’ data for a product or product line are
available and when relationships and trends are both clear and relatively stable.

One of the basic principles of statistical forecasting—indeed, of all forecasting when historical
data are available—is that the forecaster should use the data on past performance to get a
“speedometer reading” of the current rate (of sales, say) and of how fast this rate is increasing or
decreasing. The current rate and changes in the rate—“acceleration” and “deceleration”—
constitute the basis of forecasting. Once they are known, various mathematical techniques can
develop projections from them.

The matter is not so simple as it sounds, however. It is usually difficult to make projections from
raw data since the rates and trends are not immediately obvious; they are mixed up with seasonal
variations, for example, and perhaps distorted by such factors as the effects of a large sales
promotion campaign. The raw data must be massaged before they are usable, and this is
frequently done by time series analysis.

 Any regularity or systematic variation in the series of data which is due to seasonality—
the “seasonals.”
 Cyclical patterns that repeat any two or three years or more.
 Trends in the data.
 Growth rates of these trends.

Causal models

When historical data are available and enough analysis has been performed to spell out
explicitly the relationships between the factor to be forecast and other factors (such as related

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 businesses, economic forces, and socioeconomic factors), the forecaster often constructs
a causal model.

A causal model is the most sophisticated kind of forecasting tool. It expresses mathematically
the relevant causal relationships, and may include pipeline considerations (i.e., inventories)
and market survey information. It may also directly incorporate the results of a time series
analysis.

The causal model takes into account everything known of the dynamics of the flow system
and utilizes predictions of related events such as competitive actions, strikes, and promotions.
If the data are available, the model generally includes factors for each location in the flow
chart (as illustrated in Exhibit II) and connects these by equations to describe overall product
flow.

If certain kinds of data are lacking, initially it may be necessary to make assumptions about
some of the relationships and then track what is happening to determine if the assumptions
are true. Typically, a causal model is continually revised as more knowledge about the
system becomes available.

Subjective Forecasting

Subjective forecasts are qualitative in nature. Rather than being rooted in quantitative data
analysis, they are based on opinions and different sources of judgment. Subjective methods are
particularly relevant when you’re dealing with a new product that has no historical sales data.
For many first-time hardware entrepreneurs, this is the method that they turn to (at least initially)
to forecast demand.

To attain the insights that organization need for an accurate subjective forecast, organization can
use sources like customer surveys, questionnaires, or even what is referred to as a jury of
executive opinions. This is an iterative procedure based on the input of experts from different
divisions within the organization (i.e. operations, marketing, sales, etc.).

Selecting the right forecast model

Predicting the future is always associated with some level of error – and it’s important that you
quantify those errors and account for them in decision-making. Why? Depending on the
magnitude of the error, forecasting inaccuracies can have a big impact on your business’ bottom
line. For example, let’s say that you misjudge demand and produce more product than your
customers need. This could cause your inventory costs to skyrocket as unwanted product sits on
the shelves and accumulates dust. What if you’ve since made design iterations to upgrade your
product? How do you deal with excess amounts of the older version?

Each model captures a specific data pattern, each model has a shelf-life of its own, each method
yields unique results, each model reacts differently for different time horizons. There are
hundreds of variations of baseline methods that can be combined into thousands of models with

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unlimited steps and inputs you can choose from. Finding or building the perfect one may be a
one in a million proposition

1. Amount and type of available data. Quantitative forecasting models require certain
types of data. If there are not enough data in quantifiable form, it may be necessary to use
a qualitative forecasting model. Also, different quantitative models require different
amounts of data. Exponential smoothing requires a small amount of historical data,
whereas linear regression requires considerably more. The amount and type of data
available play a large role in the type of model that can be considered
2. Degree of accuracy required. The type of model selected is related to the degree of
accuracy required. Some situations require only rough forecast estimates, whereas others
require precise accuracy. Often, the greater the degree of accuracy required, the higher is
the cost of the forecasting process. This is because increasing accuracy means increasing
the costs of collecting and processing data, as well as the cost of the computer software
required. A simpler and less costly forecasting model may be better overall than one that
is very sophisticated but expensive.
3. Length of forecast horizon. Some forecasting models are better suited to short forecast
horizons, whereas others are better for long horizons. It is very important to select the
correct model for the forecast horizon being used

Factors influencing the customer demand

Seasonality

Seasonality refers to changes in order volume throughout a specific period of time. A highly
seasonal brand may serve a specific time period, event, or season, causing varying demand levels
throughout the year including large spikes during their peak season.
Seasonal demand often requires a business to reduce inventory on hand during the quiet months
and then ramp up production and their operations workforce during peak season. That’s why
many cyclical businesses outsource retail fulfillment to a third-party (3PL) logistics company,
who can store inventory, pick items, pack boxes, and ship orders for them.

Competition

Competition affects demand as there are more options for your customers to choose from and
more companies vying for their attention. When a competitive force comes into play — whether
it’s a direct competitor or new kind of solution that forces your customer to choose between you
or them — demand will be skewed. This can take you by surprise, so an agile demand
forecasting model can help you respond quickly.

Types of goods

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Demand forecasting will be very different for different products and services — from perishable
goods that expire quickly to subscription boxes that come at the same time each month.

It’s important to know the lifetime value of your customers (the total purchases they buy from
you across channels over time), your average order value (how much they’re spending each
time), and the combinations of products ordered to improve demand forecasting. Using this data,
you can understand how to group or bundle items, drive more recurring revenue, and see how
one SKU affects or drives demand for another (e.g., razor and blade cartridge refill sales).

Geography

The geography of where your customers reside and where you manufacture and ship orders from
can greatly impact inventory forecasting and the speed at which you can fulfill customer orders.
The geographic locations of your retail supply chain can be very strategic. Using fulfillment
centers in locations near your customers can help you fulfill customer demand quickly and more
affordably, so it ships from the warehouse closest to the customer.

Demand forecasting software

Demand planning software provides businesses with forecasting solutions that help them prepare
for future customer demand. Businesses implement demand planning tools to plan and manage
future inventory and production. These solutions help businesses serve their customers by
predicting their long-term needs. They can better prepare for upcoming demands by ensuring that
the proper quantity and type of inventory is stocked when needed. Demand planning solutions
rely heavily on predictive analysis and are often a part of supply chain management solutions.
This tool can integrate machine learning software to increase predictions by analyzing historical
data. To qualify for inclusion in the Demand Planning category, a product must:

Extract key insights from inventory trackers and other metrics

Convert raw data into actionable forecasts

Support and facilitate automated forecast processes

Involve predictive analysis tools

Produce reliable predictions

SAP Integrated Business Planning

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Respond to new market expectations with real-time supply chain planning capabilities and fulfill
future demand profitably supply chain management. Powered by in-memory computing
technology within SAP HANA, this cloud-based solution combines capabilities for sales and
operations; demand, response, and supply planning; and inventory optimization. - Cloud
deployment - Real-time scenarios and simulation - Social collaboration - Powerful predictive
Analytics KEY BENEFITS: Achieve a rapid deployment Get up and running quickly with SAP
Integrated Business Planning by using preconfigured process templates for an accelerated
implementation. Empower employees with intuitive features Offer a unified, intuitive user
experience with SAP Fiori and planning and simulation capabilities based on Microsoft Excel.
Plan resources effectively Optimize resource efficiency by creating supply plans based on
prioritized demands, allocations, and supply chain constraints. KEY CAPABILITIES:
Integration with SAP Supply Chain Control Tower Gain end-to-end visibility of your supply
chain, decision support, and fast corrective action through integration with SAP Supply Chain
Control Tower. Forecasting and demand management Get full demand transparency with short-
term, mid-term, and long-term forecasting. Take advantage of best-in-class capabilities for
demand sensing and statistical forecasting. Inventory optimization Establish optimal inventory
targets that enable you to maximize profits, while leaving a buffer to help you meet unexpected
demand. Sales and operations planning Deliver a cross-departmental sales and operations plan
that balances inventory, service levels, and profitability. Response and supply planning Optimize
resourcing efficiency by creating supply plans based on prioritized demands, allocations, and
supply chain constraints.

NETSTOCK

Netstock is an affordable cloud-based inventory management solution that connects to your ERP,
providing additional functionality to optimize your inventory. The intelligent data does the hard
work for you - helping you classify items, providing reliable forecasts, and order
recommendations. Netstock gives you full visibility and control of your inventory. The easy-to-
use dashboard highlights critical items needing attention. You can calculate your safety stock
levels and supplier lead times, making sure you order more efficiently and have the right stock in
the right location at the right time. With Netstock you can balance your inventory investment by
reducing excess inventory and minimizing stock-outs.

 Logility Solutions 

Accelerating the digital supply chain from product concept to customer availability, Logility
helps companies seize new opportunities, sense and respond to changing market dynamics and
more profitably manage their complex global businesses. The Logility Digital Supply Chain
Platform leverages an innovative blend of artificial intelligence (AI) and advanced analytics to
automate planning, accelerate cycle times, increase precision, improve operating performance,
break down business silos and deliver greater visibility. Logility’s SaaS-based platform
transforms sales and operations planning (S&OP) and integrated business planning (IBP)
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processes; demand, inventory and replenishment planning; global sourcing; quality and
compliance management; product life cycle management; supply and inventory optimization;
manufacturing planning and scheduling; retail merchandise planning, assortment and allocation.
Logility customers include Big Lots, Fender Musical Instruments, Husqvarna Group, Parker
Hannifin and Verizon Wireless.

Thrive Technologies

Thrive Technologies is an industry leader in digital inventory buying, with a specialty in demand
management that helps multi-location wholesale distributors improve demand forecasting and
optimize inventory levels. With its cutting-edge SaaS solutions, Thrive delivers accurate
forecasting and demand management metrics for each SKU stocked, taking trends and
promotional demand into account. Thrive is able to interface with any ERP system and improve
functionality, including Epicor Eclipse, Prophet21, Infor SXe, JD Edwards, Oracle, Microsoft,
Netsuite and custom systems. The company’s portfolio of solutions offers unprecedented
intelligence to buyers, making them more efficient and effective

GMDH Streamline

GMDH Streamline is the world’s leading AI-Powered Supply Chain Planning Software
Platform. Get an unfair advantage with our integrated demand planning & forecasting solution.
The robust time-series decomposition approach we employ allows us to create a highly accurate
statistical forecast that provides a solid basis for further demand planning processes. GMDH
Streamline effectively incorporates modern planning technologies and strategies with inventory
optimization tools and provides crucial and timely information for decision-making

Demand forecasting in Coca-Cola

Coca-Cola is an American multinational beverage corporation that was found on 1892 by As a

Candler and is a manufacturer, retailer and marketer of non-alcoholic beverage concentrates and
syrups. Coca-Cola operate in a make- to -stock environment. This process can help to provide
faster service to customers from available stock and lower costs considering Coke normally has a
distribution process of bulk items. The customers buy directly from the available inventory.
Demand management and distribution is therefore a fey focus. They use the continuous flow
method of manufacturing. The products are made in a continuous fashion and tend to be highly
standardized and automated with very high volumes of production. The production flow of Coca
Cola involves passing sub-assemblies/parts from one stage of production to another in a regular
flow. • Briefly outline the forecasting technique(s) used by the company. Coca-Cola uses the
forecasting technique of linear regression using a functional relationship Capacity and Demand
Planning in Coca- Cola.

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The relationship is usually developed from observable data and plotted in a graph the two
variables regress to form a straight line.

The linear regression line is of the form Y=a+bX, where Y is the value of the dependent variable
that we are solving for,a is the Y-intercept, b is the slope, and X is the independent variable( In
the time series analysis, X is the units of time)This method is useful for long-term forecasting of
major occurences and aggregate planning. The linear regression model is based on the relative
increase in consumer sales, which is then translated with a separate retailer model into the sell-
out sales forecast of Coca-Cola.

The restrictions with this method is that past data and future projections are assumed to fall about
a straight liner. Linear regression is used for time series forecasting and for casual relationship
forecasting. Coca-Cola’s Sales and Operations Planning Process is primarily focused on
maintaining and improving forecast accuracy also including tactical market planning, customer
order management, master scheduling and detailed weekly planning were implemented at CCM
(a regional division of Coca-Cola in France) when the plant was started in 1991.This typically
involves a five-step monthly process comprised of : data gathering and review, demand planning,
supply planning, meeting with partners and executives. Monitoring and managing demand and
supply in a product family.

Demand forecasting in Apple

Apple Inc. is one of the largest technology companies in the world. The company develops
consumer electronic gadgets such as smartphones, computers, desktops, laptops, iPods and
tablets. The company was formed in 1976 by Steve Jobs with an intention of making computers
but later it changed its focus to include the manufacturing of consumer electronics.
Forecasting the demand for Apple products is one of the most important steps that the company
has undertaken. It is important for the supplier, manufacturer and retailer to conduct the forecast
analysis of Apple’s products in order to determine the quantities that should be manufactured by
the company. Apple Inc. forecasts demand since this is the basic operation process and helps the
company to determine the quantity it should manufacture and distribute to its retail outlets
In order for the company to gain such high levels of growth and development, it has embarked
on the demand forecasting and inventory management. Apple Company forecasts the demand in
order to determine the quantity of the products it will manufacture through a series of
approaches. This includes judgmental approaches. The importance of this strategy is to address
the forecasting subject by assuming that consumers are aware of high quality of the company’s
products and can recommend others to buy the same product. While utilizing this approach, the
company gathers the knowledge and opinions of the people, therefore they become in a positions
where they would know the appropriate demand for their products. Because of utilizing this
strategy, Apple Company’s worldwide annual revenue grew by $65 billion in 2010, and
increased to $156 billion in 2012 .
In order to forecast the demand for its product through judgmental approach, the company
carries out surveys as an approach which is called “bottom up” approach where everybody
contributes his or her opinion that makes up their final forecast. This strategy has enabled the

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company to introduce innovations in cell phones, transportable music players, and private
computers that has increased the demand. For instance, the company carries out a poll for the
company’s customers in order to estimate demand before the launch of the company’s products.
This approach is leastwise credible in the meaning that the company asks people who can know
anything about future demand. Moreover, the company uses consensus methods under the
judgmental approaches to forecast its demand. This method uses just a few people to make
general forecasts. For instance, a group of the company’s top managers would meet and create
general forecast of demand through debate and discussion. For example, in the release of the
iPhone 5 in August, the executives predicted that its sale would substantially influence the gross
domestic product (GDP) in the US in the last quarter of the year. Moreover, the company
encouraged each individual to contribute his or her insight and understanding based on the view
of the market, the product and the competition.
Apple also uses tentative approaches to forecasting in order to receive some estimation of the
potential demand rate for the product. The company uses customer surveys that are at times
conducted with the use of phones, on the streets or at shops. The company displays and describes
its new product and potential clientele is questioned if they would be interested in buying the
one. Apple Company also uses consumer panels during the early stages of manufacturing the
company’s product to assess the future performance of the company’s product in the market.
While using this strategy, small groups of potential clientele gather together in order to try the
product and discuss its features and qualities.
Apple uses test-marketing technique to make a forecast of the demand for its future products.
This strategy is used for preceding the all-embracing national introduction of a new version or
product. This strategy helps in testing the market, measures the product awareness as well as the
market penetration. It also helps in fine-tuning the common marketing program and ensuring that
no potential troubles or problems have been missed. Being the most admired and accomplished
phone maker in the world, iPhone creates a huge demand from it admirers for its products. The
huge demand for its products in turn exceeds the supply that the company can ensure to its
consumers at a time. This effect creates more speculation of improved performance in the
company’s shares. Good utilization of demand forecasting strategy has enabled the company to
create employment opportunities for more than 500,000 people in the country. This figure
includes 47,000 of employees who work at Apple and 200, 000 people who rely on the Apple
economy. The sale of Apple’s products has the ability to increase share prices, customer
expenditure and supply chain that involves component makers.

Demand forecasting in Toyota

Toyota which is a multinational automotive manufacturing company forecasts sophisticated cars

by taking input from different sources. Their dealers are also part of such sources for obtaining
inputs. On the other hand, it is difficult to forecast the demand related to accessories like custom
wheels, navigation systems, etc. because it contains more than 1000 items and that too vary
according to color and model. Toyota makes use of various forecasting techniques depending on
trends in customers’ behaviour in order to plan capacity and production processes . Regional
dealers provide monthly reports, including data on forecasting for the next three months, as well
as contacting distribution centres to discuss the demand. Toyota uses specific demand forecasting

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software to control inventory management and set the objectives for operations management.
The updated version of this software allows for including more factors that can influence
increases and decreases in demand. Thousands of forecasts are analysed with the help of this
software monthly (Ludwig, 2015). With reference to the forecasts and analysis provided in the
Toyota Industries Report for 2018, it is possible to predict further increases in demand for
products in Japan, the United States, Europe, and other regions (Toyota, 2018).

Demand forecasting in Amazon

Automating through machine learning (ML) allowed Amazon.com to predict future demand for
millions of products globally in second. Leaders at the multinational tech giant successfully
reinvented their data infrastructure to improve buying systems, automate the placement of
inventory in fulfillment centers, and deliver on their promise of two-day shipping to customers.
Predicting customer demand is no easy task in e-commerce since delayed inventory or inaccurate
shipments can be costly and disrupt the supply chain. Through a comprehensive predictive model
built entirely on the cloud, Amazon.com is using data to make better decisions, streamline
operations, and deliver winning consumer experiences. E-commerce retailers sometimes need to
forecast hundreds of millions of products, and no amount of human brain power can forecast at
that scale on a daily basis.

Engineering teams, no matter how advanced, can’t do it all: assess historical trends, develop unit
sales projections, and conduct independent research for such a high volume of products. Even
when combined with more sophisticated models, legacy systems, like outdated computing
software or manual inventory logs, won’t be as accurate as machine learning models.

And when demand spikes unexpectedly, the burden on the supply chain can become even more
difficult to handle without modern forecasting methods. When toilet paper sales surged by 213%
at the height of the Covid-19 pandemic, Amazon used AI-driven predictive forecasting to
respond quickly to unforeseen demand signals and increase adaptability to market fluctuations.

Company leaders saw a need to use data and machine learning to deliver on customer promises
and achieve cost-effective functionality at scale. With those goals in mind, Amazon.com set out
to become an AI-driven leader in product forecasting.

To accelerate the process in the face of rising demand, the company partnered with Amazon Web
Services (AWS) to build machine learning models that have grown in terms of magnitude of
data, the features that is use to predict demand, as well as the complexity of the algorithms, to
where today, they are using neural network models to predict demand for the products that they
sell on Amazon. They looked at how human forecasts were performing and how machine
learning forecasts were performing. And it was night and day in terms of the difference.

Amazon.com uses machine learning on AWS to aggregate and analyze purchasing data on
products, and run their forecasting models. Additionally, the company uses browsing and
purchasing data to provide more tailored product recommendations. Machine learning allows for

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data experimentation that enables data scientists to create a better and more personalized
experience for customers.

Conclusion
Proper demand forecasting enables better planning and utilization of resources for business to be
competitive. Forecasting is an integral part of demand management since it provides an estimate
of the future demand and the basis for planning and making sound business decisions. A
mismatch in supply and demand could result in excessive inventory and stock outs and loss of
profit and goodwill. Both qualitative and quantitative methods are available to help companies
forecast demand better. Since forecasts are seldom completely accurate, management must
monitor forecast errors and make the necessary improvement to the forecasting process.

Forecast made in isolation tend to be inaccurate. Collaborative planning, forecasting, and

replenishment are an approach is which companies work together to develop mutually agreeable
plans and take responsibility for their actions. The objectives of CPFR is to optimize the supply
chain by generating a consensus demand forecast, delivering the right product at the right time to
the right location, reducing inventories, avoiding stock outs, and improving customer services.
Major corporations such as Wall-Mart, Warner-Lambert, and Proctor & Gamble are early
adopters of CPFR. Although the benefits of CPFR are well recognized, wide spread adoption has
not materialized.

Bibliography

Help from internet following websites links have been used in the completion of this project.
 www.ukessays.com
 www.grin.com
 www.heavy.ai
 www.thekeepitsimple.com
 www.thekeepitsimple.com

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