Terra Technology

Forecasting Benchmark Study

Key Findings in 2014

Demand Planning Performance

It is an exciting time to be in supply chain. While driverless cars and drone deliveries are getting all of the press coverage, supply chain planning is finally starting to evolve. New technology informs and enables new processes, allowing people to be more productive and companies to make better decisions.

Key takeaways from this year’s Forecasting Benchmarking Study include: 

  • Network complexity continues to increase at an even faster rate. The number of items for sale has increased by 30% since 2009. During the same period, shipments have grown by 2% causing average sales per item to fall 22%.
  • The rate of new product introductions is considerably higher, with more than twice as many new items introduced over five years as existed in 2009; on average, 85% of those have been discontinued.
  • Forecast value-added trends downwards again, losing 1% for an average of 12%; value-added measures the impact of demand planning efforts to improve a statistical forecast.
  • The long tail continues to be a challenge for consumer package companies with the slowest-moving 50% of items contributing only 1% of sales while the fastest-moving 10% of items generate 75%.
  • Demand Planning is essentially stuck, with error hovering in the low 50% mark since the beginning of the study.
  • Demand Sensing provides a step-change in performance, cutting average forecast error by 38% across all items encompassed in the study and by 33% for new products.

The data confirms Demand Sensing as an enabling technology to break through the demand planning performance ceiling.

Next - Network Complexity