Demand Forecasting & Inventory Planning: European Challenges for 2024
Recent data reveals that Eurozone business activity experienced a significant decrease during the summer period, with demand in the services industry showing a notable decline. This downturn in business activity mirrors the level of factory output observed during the height of the COVID-19 pandemic. The unexpected decline in business activity underscores the economic challenges facing the Eurozone.
To address these challenges, Streamline strategic partners in Poland, Artur Janyst, Managing Director at LPE Poland, and Marek Janke, Vice President of Sales and Operations at TradeBridge Poland along with Nelly Woods, Supply Chain Professional and Product expert at Streamline held the webinar “Demand Forecasting & Inventory Planning: European Challenges for 2024”.
As the Eurozone grapples with this decline in business activity, it is crucial for organizations to stay informed and prepared. The webinar unveiled strategies to overcome main challenges and ensure continued success in the ever-changing economic landscape.
The main challenges to consider are as follows:
Let’s uncover the topic in more detail.
In the face of customer unpredictability, businesses must adopt agile supply chain planning strategies to navigate the challenges posed by demand volatility and cautious purchasing behavior. Here are some best practices to consider:
1. Revise Safety Stock Strategy: Instead of basing safety stock solely on historical demand patterns, consider incorporating future period demands and adjust service level percentages accordingly. This shift allows for a dynamic response to sudden or unexpected variations in product demand.
2. Enhance Forecasting Accuracy: Prioritize fast reaction time to changes in customer demand by improving forecasting accuracy. Employ advanced analytics and real-time data to identify trends and adapt supply chain operations accordingly.
“Forecast accuracy refers to the ability to react quickly to changes in customer demand. In an ever-changing market, businesses must prioritize fast reaction times to ensure their supply chain remains agile and responsive,” –said Marek Janke, Vice President of Sales and Operations at TradeBridge Poland.“In summary, forecast accuracy plays a crucial role in enabling businesses to react swiftly to changes in customer demand and maintain a competitive edge in today’s dynamic business landscape.”
Cash flow misallocated in overstock
Cash flow misallocation in overstock can occur due to various reasons. These include customers canceling or postponing their orders, excessive orders being received, companies failing to recognize or ignore negative sales trends, and an excessive focus on meeting planned budgets.
To address these issues, there are several best practices that can be implemented. One approach is to decrease the service level percentage for C-category products, which helps optimize safety stock and inventory levels. Another strategy involves filtering products with the highest inventory value and directing the efforts of the marketing and sales teams toward them. Additionally, it can be beneficial to update or split orders for products that are projected to have an overstock situation.
Loss of sales caused by slow reaction to the demand changes
Slow reaction to the demand changes can result in lost sales, and there are several reasons behind this issue. One reason is cutting budgets and safety stock due to an economic slowdown, which can lead to inadequate inventory levels and delayed responses to customer demands. Another factor is the tendency to focus on selling the entire product portfolio to meet sales targets instead of prioritizing revenue-generating items.
To address this problem, there are some best practices that businesses can adopt. One approach is prioritization using ABC analysis, which involves categorizing products based on their revenue contribution and focusing on high-value items. Implementing a management-by-exception approach can also be beneficial by creating an alert system that highlights exceptional situations or issues requiring attention. Additionally, businesses should prioritize analysis and actions over data modeling to ensure timely decision-making and response.
Incorporating Streamline into your business model and industry conditions allows to achieve increased forecast accuracy and speed the reaction time to changes in the customers’ behavior. It is crucial to consider what strategies work best for your organization, and how to enhance predictability and address supply chain challenges.
“By tailoring the Streamline platform to your specific needs, you can optimize your operations, streamline processes, and improve overall efficiency”, – said Artur Yanyst, Managing Director at LPE Poland. “Take the time to assess your requirements and explore how Streamline can provide valuable solutions to enhance your demand forecasting and inventory planning capabilities.”
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- Up to 90% reduction in time spent on forecasting, planning, and ordering.