How can you forecast demand when supply chains are disrupted?

2 Adjust your models

The next step is to adjust your forecasting models to account for the disruption. Depending on the type and extent of the disruption, you may need to use different data sources, methods, and assumptions to estimate your future demand. For example, you may need to use more qualitative or scenario-based approaches instead of historical or quantitative methods. You may need to use more leading or lagging indicators instead of concurrent or coincident indicators. You may need to use more granular or segmented data instead of aggregate or average data. You may need to use more short-term or rolling forecasts instead of long-term or fixed forecasts.

3 Communicate your forecasts

The third step is to communicate your forecasts to your internal and external stakeholders. You need to explain how the disruption affects your demand forecasts and what actions you are taking to mitigate the risks and seize the opportunities. You need to be transparent, realistic, and flexible in your communication. You need to share your forecasts with your suppliers, distributors, customers, and partners to align your expectations and coordinate your responses. You need to update your forecasts regularly and promptly as the situation changes and new information becomes available.

4 Monitor your performance

The fourth step is to monitor your performance against your forecasts and adjust accordingly. You need to track your key performance indicators (KPIs) such as sales, inventory, service levels, customer satisfaction, and market share. You need to compare your actual results with your forecasted results and analyze the variances and trends. You need to identify the root causes of the deviations and the factors that influence your demand. You need to learn from your successes and failures and improve your forecasting accuracy and reliability.

5 Review your processes

The final step is to review your forecasting processes and identify areas for improvement. You need to evaluate how well your forecasting methods, tools, and systems cope with the disruption and how they can be enhanced or replaced. You need to assess how well your forecasting team, organization, and culture support your forecasting objectives and how they can be developed or changed. You need to examine how well your forecasting practices align with your business strategy and goals and how they can be integrated or aligned.