Never Take Your Eyes Off this Demand Forecasting Metric

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If you only look at one demand forecasting metric ever, it should be demand deviation.

As you’ll see in this video tutorial, demand deviationĀ is the #1 value influencing your profitability.

Take a look at some of the most successful and strategic supply chain planning professionals in the world, and you’ll see a common trend. They all keep a relentless watch on demand deviation in relation to:

  1. Safety stock needed and
  2. Desired service levels

Those two relational inputs, when analyzed together across a large number of items – from super steady to highly erratic – tell the most important story about your profit picture. For example,

  • Where should you invest in safety stock (and where shouldn’t you)?
  • How do your margins play-in?
  • Where are you losing – or making – money?
  • How does demand deviation define safety stock requirements?
  • Why is it pointless to add new SKUs if you’re never subtracting unprofitable ones?

Watch the video now

 

 

Related podcast: “10 Inventory Numbers Every Exec Should Care About”