Demand forecasting is one of the important parameters in Supply Chain Management. Forecasting helps business organizations in meeting demands by having enough supply in line. The demands that may arise in the future is forecasted by supply chain management professionals to the concerned persons in the company well in advance. Overestimating the demands may cause concerns in the production line and inventory level. the following are the objectives of Forecasting in Supply Chain Management.
High Level of Inventory Sometimes overestimation of demand can make the inventory level rise high which causes a serious concern for the company. High inventory level can increase storage costs and labour cost for moving the products to other storage spaces. The business selling perishable goods should also have to worry about the goods getting damaged. In such cases where perishable goods are kept at high inventory should be sold at a lower price to reduce the damage that might occur.
Inventory Storage At times business organizations get sudden demand for supplying a large number of goods. In such cases, there should be enough inventory at the store to meet the demand. The supply chain managers should forecast the orders that may come at times which should be fulfilled otherwise the customer will cancel the order. If a large number of goods are stored for distribution will reduce the profit.
Supply Chain Management professional should keep the information about the level of goods in real time. Predicting about the piling up of stock that may arise in the future should be informed to the concerned persons after getting insight from the market. Only through experience, a supply chain management professional can do forecasting effectively.
If you are interested to study Supply chain Management, you can select MBA or PG Diploma programs from Westford University College.