What does demand forecasting help businesses achieve?

Demand forecasting plays a crucial role in enabling businesses to better align their inventory levels with customer needs. By accurately predicting future demand for products, companies can optimize their stock levels, ensuring that they have sufficient inventory to meet customer requirements without overstocking, which can lead to additional costs such as storage fees and wastage.

This process involves analyzing historical sales data, market trends, and other influencing factors to make informed projections about future customer behavior. As a result, organizations can maintain a balanced inventory, respond promptly to market changes, and improve customer satisfaction by having the right products available when needed.

While the other options may reflect aspects of operations influenced by demand forecasting—such as potentially reducing the supplier base or enhancing logistics performance—the primary and most direct benefit linked to demand forecasting is the alignment of inventory with actual customer demand. It serves as a foundational element that supports various other operational efficiencies and goals within a business.