By Johan Snels – Managing Partner
At Infofarm, we predict the future for companies. More specifically, we leverage artificial intelligence to forecast the demand for your products. Why? Since an accurate demand forecast is the main driver for supply chain optimization. For which companies? Businesses that face the following challenges:
- A complex product portfolio
- Fluctuating demand
- Long supplier lead times
- High inventory costs
- Perishable products
In this short post, I’ll highlight signals which – when applicable to your company – indicate that you could tremendously benefit from a more accurate demand forecast.
1. Supplier lead times > lead times to customers
Customers today expect fast, on-demand deliveries, but many businesses rely on global suppliers with long lead times. Stocking up might seem like the safest solution, but excessive inventory ties up capital and increases costs. The real answer? Accurate demand forecasting—so you can anticipate orders and balance stock levels efficiently.
2. Emergency Orders
Relying on rush orders from suppliers might save the day, but at a significant cost. While having backup suppliers is smart, frequent emergency purchases erode profit margins and indicate deeper supply chain inefficiencies. A solid demand forecast reduces dependency on last-minute fixes, giving you greater control over procurement planning.
3. Frequent Stockouts or Overstock
If your shelves are empty too often, you risk lost sales and unhappy customers. If they’re overflowing with unsold stock, you’re wasting capital and storage space. Tracking key metrics like stockout rates, backorders, and inventory turnover helps pinpoint where demand forecasting can optimize supply levels.
4. Low Inventory Turnover
A low inventory turnover ratio signals that products are sitting too long, leading to excess stock and potential write-offs. In contrast, an extremely high turnover might mean you’re constantly at risk of stockouts. The right forecasting model helps balance inventory flow, especially in industries with long production cycles or perishable goods.
5. Frequent Production Plan Adjustments
If your production planning requires constant last-minute changes, it’s a sign that demand is not well anticipated. While some disruptions are inevitable, an accurate demand forecast reduces unexpected adjustments, improving efficiency and minimizing waste in labor and materials.
6. Late Deliveries
Missing promised delivery dates disrupts your customers’ operations, damaging relationships and trust. Frequent late shipments often stem from poor demand planning, creating a ripple effect through the entire supply chain. Demand forecasting helps align production, inventory, and logistics with real customer demand.
7. Unplanned Discounts
Discounting excess stock might increase short-term sales, but repeated markdowns erode profitability and devalue your brand. Worse, customers learn to wait for discounts, disrupting sales cycles and making demand forecasting even harder. A well-structured forecast helps prevent surplus stock and unnecessary price cuts.
Bottom line
A business that doesn’t anticipate demand accurately is either overpaying, underperforming, or both. AI-driven demand forecasting aligns supply with demand, reduces costs, and keeps your business one step ahead.
Curious how we did this for Eduards Trailer Factory? Learn about it in our ref case.
Want to see how demand forecasting can optimize your supply chain? Let’s talk.
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