Matthew is a talented member of Shiftboard’s product management team with experience forecasting retail demand. His skills include computational modeling and statistical analysis.
Most organizations experience periods of peak and low demand. From lunchtime to holidays to weather; throughout the day, week, month and year, many predictable factors influence the ebb and flow of business.
How much money would your company save if you could foresee demand? For small businesses, ones with only a few employees, saving a couple hundred dollars every week will add up to over $10,000 a year.
Multiply that savings by several franchises or locations, or go from a small business to a large one or even an enterprise. Now you’re netting tens, thousands, hundreds of thousands… maybe even millions of dollars a year.
If you can lower expenses, deliver great customer service and grow revenue, would you?
Forecasting can benefit any business with varying demand. Just a few of the many types include retail, call centers, construction and healthcare.
What is Demand Forecasting?
Demand forecasting predicts how busy an organization will be at any future moment. Workplaces use demand estimates to schedule the perfect number of employees at all times, neither understaffing peak periods nor overstaffing slow ones.
To illustrate, let’s imagine a visit to Chuck’s Grocery, a fictional supermarket with five cash registers.
Chuck’s serves a popular lunch menu from 11 a.m. to 2 p.m. Lots of people also shop between 4 p.m. and 6 p.m. During these two peak periods Chuck’s needs all five registers to ring-up customers. Through the slower parts of the day the store only needs one or two registers. Because Chuck’s Grocery knows its past performance, and can program that data into its shift planning software, managers can calculate future demand and create optimized employee schedules.
The Chuck’s grocery example is a simple illustration. An actual forecasting calculation might employ many types of data and time intervals:
- Customer counts by hour
- Inventory turnover every 15 minutes
- Revenue per 30 minutes
It can weigh trends across different time frames too:
- Day to day
- Week to week
- Month to month
- Year to year
The more data you can apply to the problem, the better your demand forecasts will be.
Let’s look at the top reasons to invest in demand forecasting.
1. Reduce Costs
Have you seen idle crew members standing around doing nothing? While it’s important to serve customers, scheduling too many employees is an avoidable expense. At the same time, businesses must know the right number of staff members needed to serve customers during peak demand, just like at Chuck’s Grocery.
2. Improve Service
Have you ever walked into a store, seen long lines then walked out? Every organization serves customers who need effective, timely service. It’s not just at checkout. The more complex the product, the greater the need for customer service. From shoes to computers, or business tools and equipment, having skilled staff who can assist, sell or upsell, is essential.
3. Increase Business
Happy customers are profitable customers, so it makes sense that revenue is closely tied to service. Capable employees create sales, upsell and assist customers to make smart choices. B2C companies can miss revenue goals or experience higher returns. Unsatisfied clients of B2B companies may cancel contracts or choose not to renew. Good forecast models pinpoint the highest revenue potential at the lowest cost.
Reduce costs, improve service and increase business are the top three reasons for demand forecasting. But wait; here are two more.
4. Lower Turnover
Finding, hiring and training new employees is costly. Whether scheduling too few work hours or sending staff home due to a lack of work, poor scheduling leads to low morale and high turnover. Optimized schedules are reliable schedules. They reduce uncertainty, which keeps employees engaged.
5. Meet Regulatory and Compliance Obligations
The process of applying demand forecasts to employee schedules compels businesses to document legal obligations, like covering breaks and lunches, and binding agreements, such as union contracts. While businesses should already do this, the exercise of programming regulatory and compliance obligations into the staff scheduling process will remedy any oversights.
The Role of Technology
Just like calculators and spreadsheets reduced the use of pencil and paper to solve for equations, SaaS or cloud based applications can easily compute complex demand forecasts and staff scheduling problems. Once available to only the largest enterprises, now any business can access the technology.
Shiftboard makes it easy to enter historical data or connect with other applications and databases. It then builds demand forecasts and optimized employee schedules. What once took hours or even days can be reduced to minutes.
Learn How Demand Forecasting Works – View Shiftboard’s On-Demand Webinar Right Now
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