What is the goal of demand forecasting within supply chain management?

The goal of demand forecasting within supply chain management is primarily to predict customer demand to optimize inventory levels. This process involves using historical data, market trends, and statistical tools to estimate future customer needs. By accurately forecasting demand, organizations can maintain optimal inventory levels, minimizing excess stock and reducing the risk of stockouts. This not only helps to ensure that products are available when customers need them but also contributes to efficient resource allocation and cost management.

Foreseeing demand enables businesses to make informed decisions regarding production schedules, procurement, and logistics, thus enhancing overall supply chain efficiency. Accurate demand forecasts lead to better alignment of supply with consumer needs, which is crucial for maintaining customer satisfaction and maximizing profitability.