It Pays to Invest in Demand Sensing
With so much focus on the Internet of Things and the slew of useful data that it can provide, it is easy to overlook the fact that many food and beverage and consumer goods companies already have a tremendous amount of Point of Sale (POS) data at their disposal that they are not using to its fullest advantage.
In fact, some supply chain software company executives estimate that fewer than one fifth of their customers have actually transitioned to using demand sensing data in order to improve their forecasts, which represents a significant missed opportunity. Those that do manage to take this step are by and large the bigger multinationals.
This is pretty surprising given this data’s ability to improve forecasting in general and sort-term forecasting in particular, which can have big implications on replenishment planning.
When the state is reached where POS data can be used for demand sensing, a firm could, for example, download consumption data outlining which SKUs were sold in the last week or day at a given store. These sorts of daily profiles can describe customers’ behavioral patterns a lot more precisely.
Good Return on Investment
Firms that do want to make good use of demand sensing have their work cut out for them. They must implement a demand signal repository in which to store all of their market syndicate and POS data, for one. They also need to clean up data that is incomplete or inaccurate, and they must ensure that their demand forecasting systems are scalable to accommodate large volumes of data.
However, it is well worth the effort in terms of return on investment. Demand sensing means having the right inventory in the right places. If customers can find what they want on the shelf, they won’t need to look elsewhere. It can also improve promotional planning, which benefits companies and consumers alike.