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A key concept of supply chain management
Demand forecasting is the process of estimating the quantity of products or services consumers will purchase (Hugos, 2011). This work looks at an introduction of supply chain management and focuses on demand forecasting. It explores the features, scope and significance of demand forecasting and its contribution to effective supply chain management. It also explores some methods of demand forecasting and their beneficial use in providing accurate information to supply management in a business.
Key words: demand forecasting, supply chain management
A key concept of supply chain management
Supply Chain Management is the process of streamlining the supply side of business to maximize customer value. It involves creating measures that ensure supply is efficient and to the required quality standards. Management ensures coordination of all departments in a business to ensure that the business products are constantly available. A manager has to be flexible because of the tastes and preference changes of consumers. Effective supply chain management gives a business a competitive edge over other businesses. It requires a business to pay attention to what happens within the business all the way until the product is delivered to the final consumer (Hugos, 2011).
Supply chain management focuses on several areas that include in-store, sustainable supply chains, logistics and strategy and planning (Hugos 2011). In-store looks at processes involve in the actual store. This include measurements of on-shelf availability, retail ready packing and back-of-store processes. Sustainable supply chains are another area of focus for this management. This looks at sustainable distribution, transport collaboration and consolidation channels. The aim is to come up with sustainable channels that suit customer priorities and avail products to consumers without fail. Logistics is an area that focuses on strategies that agree with market trends and make sure the business is on top of the market. It considers details concerning inventories, location, transportation and information. Strategy and planning discusses forecasting and demand planning. It is a critical focus area for supply chain management. This looks at the challenges of demand forecasting and how it affects demand planning.
Demand forecasting is simply estimating the quantity of a product or service that consumer will buy. It involves analysis of past events and existing trends. Demand forecasting involves identifying how consumers are likely to purchase products or services. This requires critical analysis of whetherconsumers prefer online shopping or actually visiting the business centers to purchase the products or services. This is often demanding because it requires a study of different groups of people and their preferred method of purchase. This information makes it possible to provide accurate forecasting. Demand forecasting also analyzes when they may make this purchases. The importance of when consumers make their purchases defines whether the business products have peak and off-peak sale seasons. This information helps in forecasting because demand that is influenced by seasons makes it possible for the business to avoid excess supply and save on unnecessary cost. This is one of the tasks of demand forecasting that determine whether supply chain management is effective or not.Demand forecasting mainly focus on how much consumers will purchase. This is estimating how much demand a product or service will have in the near future.
Demand forecasting consists of several features that make it possible to understand the concept better. It is the basis of planning production program. A business is able to know the quantity of input for producing an estimated number of products. This guides the budgeting for production since the sector has an estimated target or goal. Demand forecasting is an estimate of sales in the future. Knowing the estimated quantity of products or services consumers w.............
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