What is Demand Forecasting?

Demand forecasting is the process of predicting the future demand for your products. By analyzing past sales data, market trends, and other influencing factors, demand forecasting allows you to make informed decisions about inventory levels, staffing, and resource allocation. This proactive approach is essential for avoiding stockouts, overstocking, and other common issues that can disrupt operations.

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Why is Demand Forecasting Important?

Effective demand forecasting helps businesses maintain a balance between supply and demand. Without it, unexpected surges in demand can lead to stockouts, delayed order fulfillment, and dissatisfied customers. On the other hand, overestimating demand can result in overstocking, tying up capital in unsold inventory and increasing storage costs.

For example, during the holiday season, e-commerce businesses often experience a significant increase in orders. Accurate forecasting helps ensure that you have the right amount of stock to meet customer needs, avoiding both shortages and excess inventory. This balance is crucial for maintaining customer satisfaction and operational efficiency.

What Information Do I Need?

To create an accurate demand forecast, logistics providers generally need a few key pieces of information from you:

Expected Volume: Depending on the size of your business, how many orders do you expect to receive each day/week/month? This helps providers allocate the necessary resources to manage your order volume.
Units per Order: Are there changes in the number of units per order, especially during promotions? Knowing this allows providers to plan inventory and staffing needs.
Special Promotions or Sales: Provide details about any upcoming promotions, including SKUs, the number of units, and the duration of the promotion. This information is crucial for adjusting our operations to meet increased demand.

The more detailed and accurate your forecast, the better a logistics provider can serve you.

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Example of a Demand Forecast

Client: ExampleApparel Ltd.

Forecast Period: 1st September - 7th September 2024

1. Special Promotions or Sales:

Promotion Name: September Luxe Offer
Details: Buy a cashmere robe and receive 2 pairs of cashmere socks free.
Promotion Dates: 1st September - 7th September 2024
Expected Impact: Increased order volume due to promotional offer.

2. Expected Daily Volume:

Date	Expected Orders
1st September 2024	200
2nd September 2024	250
3rd September 2024	300
4th September 2024	300
5th September 2024	350
6th September 2024	400
7th September 2024	400
8th September 2024	450

3. Units per Order:

Standard Orders: Typically 1 unit per order.
Promotional Orders: 3 units per order (1 cashmere robe + 2 pairs of cashmere socks).

4. Additional Details:

Product Details:
- Cashmere Robes: SKU #CR-1001 - #CR-1011
- Cashmere Socks: SKU #CS-2002
Inventory Check:
- Current stock of Cashmere Robes: 500 units.
- Current stock of Cashmere Socks: 1000 units.
Staffing Needs:
- Anticipated need for additional staffing on 5th-7th September due to higher expected volumes.

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The Impact of Poor Forecasting

When demand forecasting is neglected or inaccurate, the consequences can be significant. Consider this: nearly 60% of global merchants report lost sales due to products being out of stock, a situation often caused by sudden, unexpected changes in demand. Additionally, 23% report damage to their reputation—a cost that’s much harder to repair than simply restocking a product.

Poor forecasting doesn’t just lead to stockouts. It can also result in overstocking, which ties up your capital in unsold inventory, leading to storage costs and potential markdowns. Moreover, the strain of responding to unanticipated demand surges can overload your logistics and staffing, causing delays in order fulfillment and eroding customer trust.

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The Borderless360 Approach

At Borderless360, we view demand forecasting as a collaborative effort. By working closely with you to gather the necessary information, we can better align our operations with your needs. This partnership ensures that we’re always prepared to handle your orders efficiently, no matter the circumstances. When we know what’s coming, we can help you avoid the detours of scrambling to meet unanticipated demand.

We’re here to support your business growth, and we understand that every order counts. By providing us with your demand forecasts, you help us maintain the high level of service that your customers expect—and deserve.

With Borderless360, you can achieve complete control over your shipping options, streamline your operations, and expand your global reach with confidence during the busiest part of the year. Let us simplify your logistics journey and empower your e-commerce success by getting in touch today. Contact us.

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