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How Demand Forecasting Software Works

If you are reading this article, then you are likely looking to implement a demand forecasting software solution. You may also be looking for a demand forecasting software comparison so that you can find the best demand planning software available on the market today. This article will review some of the must-haves of demand-forecasting software so that you can make an educated decision.

With our society advancing to rely on software, more and more software companies are starting up and providing valuable opportunities to automate certain processes to both make life easier and allow demand planners to focus on more important aspects of the business, such as innovation, budget optimization, and inter-departmental communication.

It is no secret that demand forecasting software can help you save money and grow your budget, but what should you be looking for when making a demand forecasting software comparison? That is where we come in. Most forecasting systems may offer 1, 2, or even 10 forecasting algorithms. Your historical sales or demand data is passed into each of these algorithms, and then the demand forecasting software produces a forecast that most closely relates to the trends of the historical data, accounting for things such as seasonality, moving averages, trend projection, exponential smoothing, etc.

Going off of historical data and forecasting algorithms, one of the best demand planning software solutions we’ve seen is Avercast, with an industry leading 208 forecasting formulas. Rather than just 1, 2, or 10 formulas, they run your data through over 200 methods to determine the most accurate forecast possible for each of your SKUs.

This brings us to the next important point to consider when making a demand forecasting software comparison: customization. Your business is constantly growing and, therefore, it is important to find a system that is going to be willing and able to grow with you. You may not need a certain fancy feature now but will come to want it once your sales start growing. You will need demand forecasting software that is constantly adapting to the new arising demands of an increasingly advanced world.

This is why it is important to consider features in a system that you may not need right now. Just as forecasting gives you valuable insight into the future, to be able to plan ahead, you must be able to research and predict the needs that your company may adopt as growth ensues. It can be very inconvenient to switch planning systems every few years, and on top of that, turnover and new hires already slow down the planning process.

The best demand planning software companies are the ones that are willing to work with you to create a custom solution. They recognize that the problem you are having is generally not unique to your company, and therefore, they can grow by helping you grow. If a software solution is unwilling to adapt to your needs or find a workaround in their system, they are likely not a good fit because they do not have that potential to grow.

The next most important thing to consider when choosing a demand forecasting system is how easy-to-use and intuitive the system is. As I mentioned earlier, turnover can lead to a lot of confusion. This confusion takes up a significant amount of unproductive time from your company, as well as a lot of money in training and support fees. Many SAAS (Software As A Service) companies have set up fees, recurring maintenance fees, recurring support fees, and charge for training again if you were to hire a new employee.

By choosing an intuitive system, you can cut down on unnecessary training costs and have the ability to allow multiple departments within the company to use the system. There are many diverse software solutions on the market today, and there is something to be said for having a one-size-fits-all tool that your finance, sales, marketing, and operations departments can all benefit from. When making a comparison here, it will be important to identify the cost per user and decide whether or not it will be worth it for some employees to have access, but having it as an option, even if you choose not to implement it now, can be extremely beneficial.

We have only scratched the surface of things to consider when creating a demand forecasting software comparison. Every piece of software is different and is usually created to focus on one thing and then adapted to others. It can be beneficial to learn about the history of a company and see where they began in their specialty. Because the rest of their solutions have been built around that one aspect of a business, they are likely experts at that thing, and you can have confidence that they are competent in that area of expertise. That being said, because it is their expertise, they may be lacking in another area, so it is important to identify which demand forecasting tools are most essential to your company and make sure that your choice of software system covers them. Though a diverse system can be nice, there are cases where you may sacrifice valuable tools that you thought that you were receiving when you signed the contract.

One final thing to consider regarding demand forecasting software: There are a lot of solutions out there, and they can be very expensive. Choosing the best demand planning software can be determined by the budget that you have. If you are not a huge corporation but still need more than a basic spreadsheet program, I would recommend you check out solutions like that offer a lot of value for a lower price tag and a little more work on your end.

Depending on your needs, there is demand forecasting software out there to cover them. Just to recap, make sure a system offers many forecasting algorithms to create a more accurate forecast, make sure their offered solution is customizable and has the potential to grow with you, look for ease of use and consider how every department could utilize the tools within the software, and finally, make sure they have what you need while still considering the budget for certain functionality.

Written By

This is Nick from Avercast LLC

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