​​Top 5 Mistakes in Demand Forecasting

by Andrew Hoeft | Dec 6, 2016 12:00:00 AM

Inventory levels are the key to any retail grocer’s success. Controlling perishable losses and out of stock delays is easier with demand forecasting, yet transition to new technologies and data-driven methods of inventory control can be costly if not properly implemented. Here are the top five mistakes made by retailers undergoing a transition to a demand forecasting inventory operations model.


Inventory Losses

While abundance is the traditional assumption in grocery retail ordering, the cost of excess inventory of perishables is an obvious mistake. During a transition to a demand forecasting model of inventory, be aware that seasonal and holiday demand for certain perishable products may impact the turnover value of stock. If freshness can only be maintained for a limited time, going big is not prudent unless product markup is sufficient to cover deep discount clearance reductions at discontinuation date.

Organizational Change

Employees are fundamental to the success of any retailer. If demand forecasting requires substantial changes in organizational protocol, process, or workflow activities, spend time on aligning tasks with the departments that will leverage strategy resulting post-forecast.

Multi-scale Solutions

Scalability is a critical element of successful realization of demand forecast strategy. Multi-scale solutions supply both the analytical and process support to tasks associated with the downstream workflow activities as they progress. Inventory tracking, pricing and promotional campaign execution all begins with forecasting. Understanding the scale of the strategy up ahead is half the battle. Enterprise solutions designed for the integration of operational process and analytic reporting can do the rest.


When a demand forecasting operation is first on-boarded, the benefit of enterprise capabilities may be influenced by a lack of knowledge about how to fully implement those values across an entire retail supply chain. Training of managers and staff leverage demands forecasts to boost e-commerce sales, vendor collaborations, category management precision, and enhance customer engagement.

Category Management

A frequent error in retail grocer digital and mobile e-commerce strategy is that most are missing the actionable value of those assets. Category management of partnered marketing campaigns enables both the manufacturer and the retailer to capitalize on digital coupon placement on social media. Engagement testing of digital coupon conversion paths offers insight into exponential sales increases online and in store. Connecting demand forecast with consumers and product drivers, category management is the key to perpetual inventory and real-time purchasing decision.

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