The ability to predict the future and make better business decisions is key to building supply chain resilience.
But without the right tools and technology in place, it can be a herculean task overseeing logistics operations efficiently and in real time, capturing and managing data, and deploying the different sets of available information to make accurate predictions that will impact profitability.
Organisations need to step up their supply chain forecasting capabilities to ensure that the businesses not only perform well but stay resilient across various economic cycles.
Deploying supply chain forecasting techniques optimally will also free up leaders, providing the opportunity to spend valuable unlocked time on other initiatives with higher opportunity costs, such as market and product development, trade and consumer engagement, and other business innovation initiatives. When properly executed, supply chain prediction models serve as critical input into strategic decision-making for areas such as expansion into new markets, product launches, budget development, inventory management and very importantly, customer experience improvement.
What are some of the disruptions facing supply chain management in Nigeria?
Supply chain practitioners in Nigeria are faced with a myriad of disruptions and externalities which have been shown to create a significant impact on smooth flow of goods and services across large, small and medium enterprises and multinationals. These disruptions include but are not limited to fuel scarcity and high energy cost, adverse weather conditions, infrastructure deficiencies, insecurity, international payment challenges among others.
Can supply chain forecasting work in an unpredictable environment like Nigeria?
Supply chain forecasting can work in an unpredictable environment like Nigeria, but it requires adaptation to the specific challenges and uncertainties present in the market. While forecasting in any environment has its own challenges, several strategies can be implemented to make forecasting more effective in the Nigerian marketplace.
Building Resilience through Supply Chain Forecasting
Supply chain forecasting is emerging as a critical capability required in building resilience into the fabric of Nigerian businesses. This becomes even more critical when considering the volatility and unpredictabilities within the operating environment. By leveraging advanced data analytics and predictive modelling, businesses can anticipate market fluctuations, manage inventory levels more effectively, and mitigate risks associated with supply chain disruptions. As Nigerian businesses navigate an increasingly complex and volatile global market, robust supply chain forecasting becomes even more essential for sustaining profitable growth and ensuring long-term stability. Here are some benefits of deploying good supply chain forecasting techniques:
1. Improved customer satisfaction: Supply chain forecasting can improve customer satisfaction by accurately predicting demand, ensuring that products are available when and where customers need them.
2. Lower operating costs: With production and distribution aligned with projected demand, unnecessary costs associated with overstock, storage, and expedited shipment can be reduced, thereby improving revenue.
3. Better inventory management: By accurately anticipating future demands, businesses can minimize the risk of overstock and stockouts, ensuring an optimized inventory level.
4. Revenue and Profit improvements: Effective supply chain forecasting will drive higher revenue by enabling businesses operate more responsively and efficiently in a dynamic market.
5. Improved supplier relationship: Supply chain forecasting creates visibility into potential supply chain issues, allowing organisations to make a fact-based decision while interacting with suppliers.
What are the front burner issues for business executives today?
With the rapidly evolving business landscape, executives face several front burner issues that require immediate executive attention. Among these, managing supply chain disruptions, optimising operational costs, and enhancing customer satisfaction are paramount. Supply chain disruptions, driven by global events such as geopolitical tensions, pandemics, and natural disasters, have highlighted the fragility of traditional supply chain models. Additionally, the push towards sustainability and regulatory compliance is forcing companies to rethink their supply chain strategies. Cost optimisation remains a critical concern, as businesses strive to maintain profitability amidst inflationary pressures and fluctuating market conditions.
What are the Tools/Methodologies for Supply Chain Forecasting?
There are several methods for supply chain forecasting. They could either be categorised as quantitative or qualitative. Irrespective of the categorisation, they typically follow a flow map similar to the bellow illustration:
Supply Chain Forecasting Flow Map
Quantitative methods rely on historical data to predict future demand. These methods are data-driven and employ various mathematical or statistical models to analyse past patterns and trends. They include methods such as exponential smoothing, adaptive smoothing moving average, regression analysis, life cycle modelling, amongst others. On the other hand, qualitative methods are used mostly when data is not available and could include market research, Delphi method, historical analysis, panel consensus, etc. With advances in digital technology, which is a key enabler of supply chain forecasting, different tools can now be used for supply chain forecasting. Some of these tools are AI, Big data analytics, cloud-based demand planning software, Internet of Things, simulation scenario planning tool among others.
How can improved supply chain forecasting techniques help to improve business performance?
Supply chain forecasting techniques enhance business performance by enabling more accurate demand prediction, which helps businesses align their production schedules, inventory levels, and procurement strategies with market needs. This alignment reduces the risk of stockouts and overstock situations, ensuring that products are available when and where customers need them, thereby boosting customer satisfaction and loyalty. By leveraging advanced data analytics and predictive models, companies can develop contingency plans, identify alternative suppliers, and adjust procurement strategies proactively, ensuring continuity of operations during unforeseen events.
Roadmap for implementing robust supply chain forecasting systems
Conclusion
Effectively managing supply chain disruptions in Nigeria requires the development of a comprehensive strategy that promotes supply chain resiliency by assessing and diversifying the supply chain, formulating a robust risk assessment and management plan, enhancing communication and collaboration between internal and external networks, leveraging new technologies for monitoring and tracking market and environmental changes and performance trends with the business operations ecosystem, using enhanced algorithms provided by digital tools and solutions to maintain sufficient inventory levels, and establishing alternative transportation routes. Implementing these measures can significantly mitigate the effects of disruptions and strengthen the resilience of the supply chain.
(This publication is an expert from a recent Verraki Report: Supply chain forecasting and systems for managing disruptions. Download full report HERE)
