Marcos Andres Camargo Sandoval

C.C1140880150

The role and importance of forecasting in managing a business as well as a supply chain.

Forecasting is a technique that uses historical data as inputs to make informed estimates that
are predictive in determining the direction of future trends. Businesses utilize forecasting to determine
how to allocate their budgets or plan for anticipated expenses for an upcoming period of time. This is
typically based on the projected demand for the goods and services offered, in finance, forecasting is
used by companies to estimate earnings or other data for subsequent periods, forecasting is often
predicated on historical data, it is also safe to say the future is uncertain, forecasts must often be
revised, and actual results can vary greatly. Investors utilize forecasting to determine if events affecting
a company, such as sales expectations, will increase or decrease the price of shares in that company.
Forecasting also provides an important benchmark for firms, which need a long-term perspective of
operations, those were some examples of how forecasting acts in some business models, that does not
exclude an important one like supply chain.

As a business owner, there is a worry about facing changing customer demands while having constant
pressure to reduce costs and improve margins. Given the current situation in shipping with congestion,
shortages of equipment (containers) for your ocean freight and the pandemic impacting many
businesses around the globe, supply chain forecasting is now more crucial than ever. In case for supply
chain forecasting combines data from past supply with insights and understandings about demand, to
help you make the best decisions for your business, whether it’s stock inventory, cargo booking, budget
planning or expanding to new markets, etc. Analyzing supply accounts for the bulk of supply chain
forecasting. It involves looking at data about your suppliers to understand when you need to order
products from them, whether they’re whole products or raw materials to be assembled further down
the supply chain. Analyzing demand is also important to help you understand how much of your product
your customers want during any given week, month or quarter. This is affected by a number of factors
that can be predictable, like seasons and holidays, or unforeseen, like global events and natural
disasters. Often such events can impact various transportation modes such as ocean freight or inland
transportation. This helps maintain a constant vision about what could happen during the business
throughout a year or even more time which is what is sought, Forecasting is an imperfect science, but it
is also a necessity for most businesses. That's particularly true when it comes to supply chain
management. Proper forecasting helps ensure you have enough supply on hand to satisfy demand.
Business analysts use supply chain management systems and other tools to forecast demand weeks
and months in advance. Proper forecasting helps ensure you have enough supply on hand to satisfy
demand. An overestimation of demand leads to bloated inventory and high costs. Underestimating
demand means many valued customers won't get the products they want.

According to the Association for Operations Management (APICS), supply chain management involves
the "design, planning, execution, control and monitoring of supply chain activities." A few of the
objectives are to build a competitive infrastructure, synchronize supply with demand and measure a
company's performance. Supply chain management (SCM) software can help facilitate the process of
forecasting and measuring the supply chain synchronizes the supply and demand cycle through the
use of real-time information. As a result, inventory is less likely to sit unused. For example, a baked
goods manufacturer using SCM software can monitor its inventories and place an electronic order to
its suppliers in anticipation of a spike in demand. Experience is also an asset when it comes to
managing your supply chain. Having years of demand data helps you better predict future demand,
the perks these techniques offers are may but these are the more important: Improve Pricing,
shipping, reduce Inventory stock outs, safety stock, increase customer satisfaction, predict product
demand, seasonal variations in demand and planning processes.

In conclusion, It is pretty clear that if a supply chain wishes to keep in the market as long as possible a
forecasting strategy, it may be virtual or by experience, is needed, from my experience in accounts, I was
able to take a hint about this topic, but since the operation was small we did not use a SCM software,
nevertheless we took care of buyers and carriers in order to maintain business with them, we always
looked very carefully what the product we were moving, prices, type of trucks. All of these were done so
we can continue a partnership and create an environment where we could continuously be growing, it
served us a lot since that reduced the hard work and optimized our time while getting new customers.
So I would dare to say even though the techniques were not exactly as good as a software we usually
looked at every action and decision while looking forward to the future.