Never Take Your Eyes Off this Demand Forecasting Metric

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”