Statistical demand forecasting techniques have been available to industry for decades, but small- and medium-sized companies rarely use them. There are barriers to implementing these techniques, but these hurdles are quickly becoming lower. In this article, I will discuss statistical forecasting of customer demand and of material demand; and how to start using it quickly and cost effectively.
The key benefit to becoming competent at statistical demand forecasting is significant inventory reduction. The cash preserved from this reduction can be used to finance more value added activities. Plus, judiciously reducing all inventory is one of the fastest ways of converting floor space from inventory storage into space for value added activities, like manufacturing – at very little added expense