Untangling the Complexities of Demand Forecasting
Whether facing a major product launch or compiling standard monthly forecasts, the accuracy of demand forecasts is crucial. No one understands this as intimately as Apple, who is fresh off of its much-anticipated iPhone X, 8 and 8 Plus product announcements. Apple, despite its affinity for releasing limited amounts of its highly demanded new devices to further stoke demand, offers an interesting example of the complexities associated with forecasting.
Lessons in demand forecasting from the iPhone
There are few product launches as massive and complex as Apple’s. The consumer electronics giant has mastered the art of delivering a high profile and highly anticipated, iPhone launch. Even more impressive are the droves of customers that lineup, sometimes days in advance, to get their hands on the new gadgets as soon as they hit the shelves. With this overwhelming demand, it is mission critical for Apple’s demand forecasting, production and delivery operations to go perfectly to avoid any detrimental delays.
Essential to predicting iPhone demand is allowing customers to pre-order their device in the model and color that they desire. While this alone is challenging to forecast, Apple is facing its biggest demand forecasting challenge since the launch of the original iPhone according to The Wall Street Journal. Given the heightened price point of iPhone X, Apple has no precedent to gauge demand for this device so data from pre-orders will be critical to fuel ongoing production.
Further adding to the iPhone launch complexity is the variety of sales model and channels in play. With several different distribution points available to customers, including online ordering, Apple stores, and partners such as Verizon and AT&T, Apple requires an integrated end-to-end supply chain. Luckily for Apple, the company has several advantages, most notably a sizable budget to address any issues that it might face and access to world-class vendors that manage every facet of their supply chain needs. Alternately, most brands are not as fortunate, thus it becomes even more critical that they are creating and utilizing accurate forecasts.
Fueling a more accurate demand forecast
The ability to hone forecasting skills can make the difference between a successful product rollout, or injure the brand image with product shortages. While there’s no way to accurately forecast demand 100 percent of the time, by getting a real-time look into how much stock you have on hand, whether you can assemble more if needed and being alerted if that product is – or isn’t — selling well, you can make better planning decisions.
The good news is, you don’t need to have a budget the size of Apple’s to make smarter, data-driven decisions. ModusLink can help brands simulate changes in supply and demand, run real-time material requirements planning scenarios in just seconds, and store snapshots of history to enhance analytics for predictive planning. As a result, our customers can quickly identify and fix any supply chain problems, such as sourcing delays. By implementing fluid demand and supply plans that are updated in real-time, based on true demand signals, material availability and capacity, your revenue and profit potential is maximized.
The power of a lean supply chain
While accurate demand forecasts are essential, running a lean and efficient supply chain is paramount. The possession of inventory can be considered an asset – but it is an asset that no company wants too much of – or too little. Finding that level of balance for your business is what will ensure a smooth process in production and sales, as well as the operations within your warehouse. Partnering with a supply chain solutions provider that employs these strategies throughout its entire operation can lead to identifying new time and cost saving initiatives, which can, in turn, help to reduce overhead.
While most brands aim for the cult-like following that Apple has amassed, emulating the company’s mastery of a seamless end-to-end supply chain operation is undoubtedly more attainable. Read how TomTom, a world leader in traffic, navigation, and mapping products, was able to dramatically improve time-to-market and better scale new product introductions with the help of ModusLink.
Through collaboration, trust and, conflict of interest avoidance companies are able to quickly adapt to changes in today’s world. Constant review is needed on the impact of the main cost drivers in:
- Conversion labor costs
- Logistics freight
The pressure on time-to-market, CO2 emission reductions, and risk management demand versatile solutions. Optimizing the design for manufacturing and logistics often gives new opportunities, resulting in decreased cost and improved market expansion – ModusLink is fully committed to helping all of our clients achieve this.
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