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Demand Forecasting For Delivery Businesses 

Demand Forecasting For Delivery Businesses 
Demand Forecasting For Delivery Businesses 

Anticipating consumer trends and demands are crucial for owners and managers to deal with changes in demands and the economy, competition within your industry, seasons and so much more. 

Demand forecasting is where it’s at!

If you’ve never heard of demand forecasting, then this article will help give you a run down of all the important points you need to know. 

Before diving into the deep end, you need to know what exactly is demand forecasting and why it’s important for your business. 

What Is Demand Forecasting?

Demand forecasting refers to the operation of comprehending and anticipating future customer demand. This involves using historical data, as well as other information to highlight their potential in the market, as well as make accurate decisions when it comes to growth strategies and costs. 

Through predicting future sales you can optimise your inventory and improve your planning and warehousing preparations. 

Not having demand forecasting can lead your business to make deficient choices about their goods and target markets. These poor decisions can negatively impact your inventory, management of your supply chain, profitability and customer experience. 

Now we’ve gone over what is demand forecasting, it begs the question why is it important and why should businesses incorporate it into their system?

The following paragraphs will enlighten you of its importance, as well as the different types of demand forecasting. 

Supply chain
Supply chain

Why Is Demand Forecasting Important For Your Supply Chain?

Making a precise demand forecast can have a substantial effect on your business. But why is it important and how can this practice impact your operation? 

It’s no surprise that setting prices is crucial to running your company. You need to take into account market activity, determine  the most accurate mark-up and the demand for your goods. 

Prior to forecasting your demands you should assemble the following information regarding your business:

  • Average selling amount each day, week, month etc.
  • Seasonal impacts
  • Plans for upcoming promotions
  • Results from past promotions

Demand forecasting can help you estimate the time-frame your product will be most popular and make changes to your price. Should there be a dip in demand, you can combat this by reducing your price. 

You must be able to withstand surges in demand and avoid running out of stock during busy periods. Poor customer experience can lead to negative reviews published online which can reach shoppers and ultimately damage your business’ reputation. 

When planning your budget, demand forecasting can help you understand how to make better use of your resources and keep up with customer demand. 

Demand forecasting is also useful for goods that have expiry dates (food, chemicals). Without this solution, your business is at risk of losing money if it produces more items than needed and has to sell them at a discount.

You also incur unnecessary inventory holding costs should you produce too many items. 

The Different Types Of Demand Forecasting 

Short-term Demand Forecasting 

Short-term forecasting refers to looking at a small window in time that estimates customer demand anywhere between three months to a year. This type of forecasting helps plan your product distribution and prepares sales-boosting policies based on real-time data. 

For a majority of businesses, short-term forecasting is just the tip of the iceberg and can be used in conjunction with long-term forecasting.  

Long-term Forecasting 

Long-term forecasting makes projections between one to four years into the future, providing insight of an operation’s financial requirements and profitability. Such forecasting can help businesses identify possible issues, opportunities and create strategies to achieve specific management goals proactively. 

Macro & Micro Forecasting 

Macro forecasting focuses on identifying external factors impeding commerce, such as consumer trends, competition and economic circumstances. Identifying these factors allow operations to recognise opportunities for growth, anticipate future financial challenges and possible shortages of resources. 

Micro forecasting also looks at external impacts inside a specific business with a special focus on the performance of existing and potential customer accounts.


What Kind Of Things Influence Consumer Demand? 


Like the seasons come and go, so does the rise and fall of consumer demand. For example, Christmas is one of the busiest times of year with consumer demand for products going through the roof. 

This cannot be said for lull periods in which there are no significant holidays for consumers to shop for.

It’s cyclical in nature, making it easy for businesses to predict the quantity of resources they hold in their inventory. 

Price Of Goods 

When the price of goods rises, consumer demand is expected to fall. This also means that when the price of a product decreases, consumer demand will rise. The cheaper the price of goods are, the more likely consumers will purchase in higher quantities.  

Consumer Confidence 

Consumers are more likely to purchase higher quantities of goods should they feel confident about the nature of the economy, as well as their own financial prospects. It also influences whether they’ll use credit to make purchases. 

Should the economy show signs of growth and continuing potential for expansion this will typically align with growth of consumer demand. 

How To Conduct Successful Demand Forecasting 

It’s not enough to ask yourself “what is demand forecasting?”. You also need to know how to successfully conduct demand forecasting which is key for companies when it comes to enhancing revenue, keeping up with seasonal trends and competitors within the industry, and not to mention accurate decision making.

Forecast demand is a great way to predict future demand and give customers the service they deserve.

Here are a few tips below to conduct successful demand forecasting! 

Collect & Record Accurate Data 

Assemble as much information as you can relating to possible sales. These can include trends in the market, historical data and recognition of present events. You must be aware of your competitors movements at all times so your business doesn’t fall behind and lose potential interest from shoppers. 

Investigate & Evaluate

Investigating and evaluating all the information gathered will help you anticipate future consumer demand. This is because it analyses consumer behaviour when it comes to certain products. Such data will also highlight the effect disruptions or delays have had on the consumer.

Set Appropriate Budgets 

Setting an appropriate budget for your business will help maintain profitability and prevent over or underspending. Operations are always looking for ways to save money and by setting a budget, you can stick with those costs.

 If you’re overspending, your businesses can lose their profitability and be unable to keep up with other payments. 

Demand Forecasting & Logistics 

When it comes to logistics, demand forecasting is significant in ensuring stock is arriving at a rate that matches your business and optimising fleet performance. Demand forecasting also ensures that you are getting the correct stock sent to specific delivery partners. 

Now you’ve got all the information, it’s time to select the most accommodating software that will keep your logistics business in check. Locate2u is a delivery management software, who’s groundbreaking technology allows you to keep track of all your bookings. 

It’s an all-in-one platform that keeps information in the same place, making it accessible for team members. By storing this data, you can make predictions on future sales, growth and in doing so, optimise your inventory and planning. 

Nothing feels better than being organised. 

Locate2u delivery route planning
Locate2u delivery route planning

Optimise Your Deliveries With Locate2u

Locate2u is the solution you’ve been waiting for. 

Sick of spending hours planning manual routes for your drivers? Locate2u’s route optimisation can build time-efficient routes in just seconds, that way your drivers can get straight on the road and you can focus on other business operations. In doing so, enhancing you and your team members’ overall productivity. 

Not only does Locate2u optimise your routes, this software plans and manages your bookings, gives you access to real-time tracking and offers proof of delivery. 

Learn more about how you can optimise your deliveries by clicking here, or call 1300 163 087 and speak directly to the Locate2u team. 

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