Consumption-Based Forecasting and Planning

CHAPTER 4Consumption-Based Forecasting and Planning

The ability to predict future demand requires more than the ability to respond to customer needs. The digital economy and current disruptions mandate that companies sense and respond to shifting consumer demand patterns, which necessitates investing in more responsive demand planning technologies. Companies must contend with shifting consumer demand, private-label, and smaller “lateral” direct-to-consumer digital competitors (start-ups). In order to effectively compete, companies need to invest in predictive analytics that will allow them to anticipate markdowns, sales promotions, inventory allocation, fulfillment, and assortment so they can be prepared not only for customer requirements, but also to provide consumers with a great purchasing experience.

The current disruption related to COVID-19 has been a wake-up call for retailers and consumer goods companies, causing havoc with their categories, brands, and products and making it harder to predict supply requirements due to the acceleration of these new market trends. The new, changing shopping preferences continue to differentiate how consumers prefer to shop and pick up their purchases. According to recent research, more than half of brand management professionals are struggling under the weight of increased consumer demand for home delivery, online purchasing, and in-store pickup preferences. Many feel these new expanded behaviors are unlikely to subside, even as COVID-19 ...