Business and sales are all about giving the people what they want, therefore the issue of predicting consumer demand is one that has been foremost in the mind of business people for centuries. Demand forecasting is a critical factor in business, especially in retail, and it has often proven difficult to master. Thankfully a number of recent technological developments have made the forecasting process easier.
There are a number of interesting technological developments we could point to in demand forecasting. Some are more profound than others, and more still are better known by the wider public. For our purposes, and for the retail industry in general, there are three key technological developments in demand forecasting that deserve particular focus.
1. Artificial Intelligence
Artificial intelligence (AI) is so frequently discussed nowadays that it is becoming something of a cliche. However, there is a good reason for this as AI technology is particularly important to improved demand forecasting. For example, according to the international consulting company McKinsey & Company, AI can reduce errors in supply chain networks by up to 50%.
What is more, AI tools allow their users to combine real sales data with customer information including demographics, location, estimated incomes. You can make predictions with a limited amount of data yourself, however, AI enables you to make more accurate forecasts with exponentially increasing data. This saves costs, transportation time, and cuts down on stock overflow too.
The total value of AI in the stock and supply chain is already estimated at $4 trillion, and this figure is likely to grow. There is not a single area of your business that will fail to benefit from AI, and the improved demand forecasting made possible by the technology will significantly boost your bottom line.
2. Stock keeping streamlining
This refers to a series of developments governing one concept rather than a specific technology. Demand forecasting requires detailed knowledge of how many stock-keeping units (SKU) you can transport, store and process. That is why intelligence inventory and warehouse management systems are becoming more important.
These forms of technology are able to process data on your total storage space, and accurately model where your SKUs should be placed for maximum efficacy. Optimizing this process provides higher quality data for demand forecasting and significantly improves a number of other business operating areas. There are several tools available for stock-keeping streamlining, and we recommend an approach combined with inventory management.
3. Social media
Social media makes it so much easier for retailers to accurately predict consumer demand as it gives them a direct line with their customers. Social media also can collect huge amounts of valuable data on an audience’s potential as a consumer base. If you want to expand your audience or improve your existing one, social media allows you to do that.
Also, social media serves as a launching pad for emerging technology that can be used in demand forecasting. In the near future, some industries will be able to offer trials and other testing concepts via augmented and virtual reality for example. The ability of consumers to virtually exhibit their interest in products in this way will provide more accurate data to retailers, thus boosting their demand forecasting.
Emerging technology should always be embraced by retailers when they are able to do so. Implementation can be difficult in some cases which is why it is important to secure the help of dedicated specialists. When it comes to demand forecasting, this fact rings particularly true, so invest in the support of a high-quality team like Leafio.