How do you adjust your demand forecasting in response to logistics disruptions?

1 Understand the impact

The first step is to understand the impact of the disruption on your demand, both in terms of quantity and timing. You need to assess how the disruption affects your customers, your competitors, your suppliers, and your own operations. For example, a pandemic may reduce the demand for some products, while increasing the demand for others. A strike may delay the delivery of your orders, or force you to switch to alternative modes or routes. A natural disaster may destroy some of your inventory, or disrupt your communication and coordination systems. You need to gather as much information as possible, and update it regularly, to monitor the situation and its implications.

2 Adjust your methods

The next step is to adjust your demand forecasting methods to account for the disruption. Depending on the nature and duration of the disruption, you may need to use different data sources, models, or techniques to generate more accurate and reliable forecasts. For example, you may need to use more recent or real-time data, rather than historical or seasonal data, to capture the current demand trends. You may need to use more qualitative or judgmental methods, such as surveys, expert opinions, or scenario analysis, rather than quantitative or statistical methods, to incorporate the uncertainty and variability of the situation. You may need to use more flexible or adaptive methods, such as moving averages, exponential smoothing, or machine learning, rather than fixed or static methods, to adjust your forecasts as new information becomes available.

3 Communicate your forecasts

The third step is to communicate your demand forecasts to your stakeholders, both internally and externally. You need to share your forecasts with your team members, your managers, your suppliers, and your customers, to align your expectations and actions. You need to explain the assumptions, methods, and limitations of your forecasts, to avoid confusion and misunderstanding. You need to provide feedback and updates on your forecasts, to maintain trust and transparency. You also need to solicit input and suggestions from your stakeholders, to improve your forecasts and incorporate their perspectives and needs.

4 Review your performance

The fourth step is to review your demand forecasting performance and learn from your experience. You need to measure and evaluate how well your forecasts match your actual demand, and identify the sources of errors and deviations. You need to analyze and understand how the disruption affected your demand patterns and behavior, and what factors influenced your forecasting accuracy and reliability. You need to document and share your findings and lessons learned, to improve your forecasting skills and processes. You also need to update and refine your forecasting methods and systems, to prepare for future disruptions and opportunities.

5 Manage your inventory

The fifth step is to manage your inventory based on your demand forecasts and the disruption situation. You need to balance your inventory levels and costs, to avoid stockouts or excesses. You need to adjust your inventory policies and parameters, such as reorder points, safety stocks, or order quantities, to account for the changes in demand and supply. You need to optimize your inventory allocation and distribution, to meet the demand of your different locations and customers. You also need to monitor and control your inventory quality and availability, to ensure customer satisfaction and loyalty.

6 Coordinate your logistics

The sixth and final step is to coordinate your logistics activities and resources based on your demand forecasts and the disruption situation. You need to plan and schedule your transportation and distribution operations, to deliver your products to your customers on time and in good condition. You need to select and negotiate with your logistics service providers, to secure the best rates and service levels. You need to integrate and synchronize your logistics processes and systems, to improve your efficiency and effectiveness. You also need to mitigate and manage your logistics risks and issues, to minimize the impact of the disruption and recover quickly.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?