It was noted that demand forecasting is a critical process for any business, but

perhaps none more so than those in consumer packaged goods. Inventory, production,

storage, shipping, marketing – every facet of CPG and retail companies’ operations are

affected by accurate forecasting. Some of the companies that uses demand forecasting

include a beverage company (which is highly disclosed by the author), a global alcohol

brand, needed to predict upcoming sales at the SKU level to make smarter planning

decisions for manufacturing its key product line. In the past, the company relied on its

historical data alone to decide the products and quantity to manufacture and deliver to

its distributors. Using this method, the company tended to overproduce as a safety net,

wanting to avoid the risk of shortages and consumers being forced to purchase a

competing product at all costs. When the company turned to forecast based on the

demand of the other products, it began building its own market demand forecasting

models on a weekly basis. As a result, executives could make better staffing and

purchase decisions for raw materials that were needed to produce their beverages.

Another one is a convenience store chair, 7/11, executives at they needed to

reduce inventory costs and improve the bottom line, but they didn’t have the

sophisticated tools or internal knowledge to make the accurate forecasts necessary to

meet these objectives. The company began by looking at the chain’s major product

categories: dairy, alcohol, candy, snacks, and tobacco. They examined each category

on a national level to determine what was driving the demand for these products. From

there, they dove into a more granular level, taking in economic factors for certain

markets such as employment and cost of living to build predictive models. With this

information, the grocery chain was able to build predictive models for each of its market
areas, which procurement used to stock shelves with the goods consumers were ready

and able to purchase.

Reference:

Prevedere. (March, 2018). 3 Real-World Market Demand Forecasting Success Stories.

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