By Salim Daya, justfoodERP
Have you ever paused to consider the importance of accurate demand forecasting? Obviously you know it’s crucial to your organization’s success, but until you really hone in on the different reasons behind the need for accuracy, you won’t take customer forecasting as seriously as you should.
Consider the following:
- Customer satisfaction. When a customer places an order for a product, they expect it to be delivered on time. Delayed shipments cost customers time and money, which hurts their bottom lines and ruins your future business relationships.
- Out of stock is costly. From your perspective, an out of stock part or product can prove very costly. It requires your employees to spend man-hours searching for the product and tracking it down. It can also delay shipments that are otherwise prepared and ready to be sent out.
- Overstock creates strains. Overstock situations can put unnecessary strains on your warehouse and increase holding costs. Furthermore, in situations where the overstock is dramatic, you may have to liquidate and eat the margins.