Demand Prediction is like a muscle.

All businesses need to engage in demand prediction, at least to the extent of their Replenishment Lead Time, to ensure that supplies are available to fulfil it. They also need to predict demand for longer periods for other actions, such as capacity creation, manpower planning, financial planning.

The key to getting good demand prediction, apart from a good demand signal and reliable demand drivers, is establishing a fast feedback loop in this process. Predict demand, observe actual demand, analyse prediction error, fine tune the model. The more we do it, the better the prediction models.

In a sense, demand prediction behaves more like a muscle. We need to exercise it regularly for best results.