The supply chain may be settling out after the myriad pandemic-related disruptions, but that doesn’t mean forecasting and demand don’t continue to be important. In fact, as we enter a post-pandemic era, all companies should be reviewing lessons learned and focusing on how to prevent future shortages like those from 2020 and 2021. There are many tools to help with demand planning, but now, AI is adding to the mix. By some measures, adding AI to demand planning can reduce forecasting errors by as much as 20 percent to 50 percent, making it well worth a look. The value add of AI is its ability to predict factors that will influence demand—even including weather. Say you supply golf balls to retailers like Dick’s Sporting Goods, and the long-range forecast calls for a rainy spring. AI can pull that information in and help predict a slower season, for instance. You can adjust your sales predictions as well as the quantities of golf balls you may want in your inventory.
Despite all the ways AI can boost your demand planning, however, it’s essential that you don’t let it run the show just yet. There are still unpredictable occasions that AI won’t catch. Back to the early days of the pandemic, AI likely would have missed the run-on antiseptic wipes and hand sanitizer, for instance. A human at the controls, however, would recognize the mad dash for these items and at least try to get on top of supplies. Taken together, however, AI, humans, and other forecasting tools can be a powerful method for managing and preventing future stock outs.
