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The bane of forecasting in Supply Chain is its rigidity.
Demand Forecasting is often associated with errors. Comments like ‘Forecasts are always wrong’ are widely prevalent.
Let’s see why forecasting has earned this poor reputation. The issue, in my opinion, is the way forecasting is often used in supply chain planning. Many companies make their monthly forecasts so rigid that it hurts supply flexibility. Forecasts are frozen and no one is allowed to touch it.
We know that demand keeps evolving and it’s impractical to freeze it in advance. What we need is a forecast that is malleable and adapts to the changing demand patterns.
That’s precisely what Demand Sensing does. It makes forecasting represent reality in a dynamic market.
While monthly forecasting can still be used for medium and long term resource planning, near term supply planning should be done using Demand Sensing.