When economic disruptions in the global supply start creating shortages in inventory, demand planners are seeing more intermittent demand in sales and shipment data across the entire enterprise. Intermittent demand for a product or service appears sporadically with lots of zero values in the demand data. As a result, demand forecasting with intermittent data for inventory planning is becoming more vital for business planners to master in modern consumer demand-driven supply chain organizations. However, the critical tools necessary for demand planners to analyze and forecast for an e-commerce forecasting function are still underrepresented. In a previous LinkedIn article, I proposed a new approach to intermittent demand forecasting that does not have the limitations of the widely-used Croston method.

Moreover, in my experience with the CPDF® professional development workshops for demand forecasters and planners, adequate data analysis literacy is lacking in the forecasting process for balanced demand and supply (S&OP) planning and agile execution.

The Need for a Smarter Approach in Intermittent Demand Forecasting

Most demand planners and managers operate with a mindset that suggests a forecast is “just a number” without recognizing explicitly that uncertainty is a quantifiable factor. Managers fail to recognize that e-commerce has led to a paradigm shift in the S&OP process and the proper role of a consumer demand-driven forecast needs to be able to drive a more balanced sales & operations plan.

A smarter way to take account of intermittency of customer and consumer demand patterns is needed , so we can better communicate changing needs with greater agility to more entities. The Internet is the perfect means for transforming conventional industry models because it constitutes an infrastructure that transcends traditional boundaries. In place of conventional planning systems based on sequential relationships, in which orders are placed with a supplier, inventory is consumed, and another order is placed, Web-enabled planning systems can now provide a near-instantaneous communications link among trading partners.

The single forecast of consumer/customer demand, at the item-location level, provides the unifying perspective from which to integrate all forecasting requirements in the supply chain.