Forecasting Demand Despite Shortages

Forecasting future demand despite historical shortages is a massive challenge for demand planners. This article presents three techniques to estimate unconstrained demand during shortages: fill in missing values based on historical figures, use your forecasting tool, or use historical demand drivers. Finally, we will see how forecasting demand using more granular time buckets might help with data quality.

Nicolas Vandeput

--

Credit

Shortages cripple supply chains around the globe. They harm service levels, frustrate your clients, and benefit your competitors while pressuring your teams to find quick (and often expensive) solutions. Moreover, they pose a massive long-lasting challenge — -even after you could replenish your inventory! — -How can you forecast future demand for a product that was recently out of stock?

Figure 1 Sales pattern interrupted by frequent shortages (data: online retailer).

Demand Forecasting or Sales Forecasting?

--

--

Nicolas Vandeput

Consultant, Trainer, Author. I reduce forecast error by 30% 📈 and inventory levels by 20% 📦. Contact me: linkedin.com/in/vandeputnicolas