In supply chain management, what does demand forecasting aim to achieve?

Demand forecasting in supply chain management is a crucial process that aims to predict future customer demand for products and services. The primary goal of demand forecasting is to optimize stock levels, ensuring that the inventory aligns with anticipated demand. By accurately forecasting demand, a business can maintain sufficient inventory to meet customer needs while avoiding overstock situations, which can lead to increased holding costs and potential waste for perishable goods.

Optimized stock levels help businesses to streamline their operations, minimize stockouts or overstocks, improve customer satisfaction through timely fulfillment, and enhance overall supply chain efficiency. Accurate demand forecasting is essential for production planning, procurement, and resource allocation. Therefore, effective forecasting directly contributes to maintaining a balance between supply and demand, which is critical for profitability and operational success in the supply chain.