Have you recently thrown your usual forecasting methods out the window? It's not surprising. Traditional forecasting and planning approaches have quickly become obsolete amidst the ever changing landscape and the economic uncertainty.
You've probably been reacting as quickly as you can. In the meantime, your demand planning, staffing, supply chain and channel management are all taking hits. You might wonder if it's possible to be proactive in today's environment. It is. First, let's look at the "new normal," or at least a best guess as to what that will be.
Uncertainty Is Here to Stay
Welcome to the Era of Disruptions. Get comfortable, we're going to be here a while. We expect future instability and uncertainty to come from several areas: continued fallout from the pandemic and potential infection spikes, civil unrest, inflation, climate change and trade policies.
These challenges won't be going away soon, and consumer demand is evolving as a result. People are changing the way they travel, work, and buy. Volatility will also increase, making it difficult to predict and manage demand without the proper tools and analytics.
So far, organizations have been reacting as best they can. But reactive approaches negatively affect your bottom line and cause a host of additional challenges on their own. The good news is that new forecasting and planning approaches can help you navigate through the disruptions and even thrive, because you'll better be able to predict external circumstances' impact on demand, consumer preference, and behavior.
Why You Need New Forecasting Approaches
Jorge Malibran, Partner, Cognitive Process Re-Engineering, IBM Services explains that old forecasting models don’t work for COVID-19 and hypothetical similar events because they all use historical data. Since the public health and business environments have changed so quickly and drastically, we can no longer rely on history to predict future occupancy.
Too many things have changed — travel is restricted, supply chains have been disrupted, and the pandemic demands new sales and customer service options. Hospitality organizations have little choice but to seek out novel approaches to forecasting. And critically, these approaches can't be an afterthought. Instead, they need to already be tested and in place in order to be effective before the next disruption hits.
The pandemic has shown us that it's crucial to strengthen resilience across global supply chains. Using demand sensing and automated forecasts, companies are able to respond quickly to customers' changing needs and find new ways to serve them.
Introducing Data Analytics for the Hospitality Industry in an Era of Disruption
IBM's answer to these challenges is demand sensing. It allows businesses to use automated data and analytics to provide accurate, real time insights using the latest external developments. These insights are valuable because they provide the right data at the right level of detail to help you make informed demand forecasting decisions.Demand sensing combines COVID-19 disruption data such as health and economic information with additional unstructured external data, including news, weather, and social sentiment. All this data can be filtered down geographically to the county level.
Demand sensing can help you improve profits and increase productivity and customer satisfaction — and to be prepared when the next surprise hits. It can also help you quickly and accurately prepare for changes in customer demand, for example, after travel restrictions are lifted. It can help you create more positive customer experiences and loyalty and turn crisis into opportunity.
“In today’s environment, companies need a fundamentally different approach for demand planning,” said Christian Toft-Nielsen, Vice President AI Workflow, IBM Services. “Almost every CEO is thinking, ‘how do I manage this disruption, make the right decision and optimize my supply chain operations?’”
“Demand-sensing technology helps businesses understand pandemic-related disruption and economic risks in order to forecast demand and solve for specific supply chain problems. These emerging technologies are unique because they take unstructured data like news and pair that with sensing information such as consumer sentiment.”
It's a huge boost to your traditional time series forecasting.
“Short-term, companies need to be prepared to respond quickly to ever-changing market demands and maintain competitive advantage,” said Malibran.
“Long-term, the goal is to make operations more efficient by connecting supply and demand — usually, if you have a deep understanding of demand you can supply correctly, yet a lot of companies treat these separately.”
Our results speak for themselves. Here are some of the positive outcomes our clients have been seeing after adding Demand Sensing tools into their processes:
- 95%+ Demand forecast accuracy
- 5% productivity improvement
- More efficient use of working capital (lower inventories)
- Avoidance of vacancies and mismatched pricing vs. demand
- Minimized obsolete inventory
- Increased customer satisfaction through increased availability and optimized pricing
Get Prepared for the Next Disruption
Old approaches to forecasting and planning simply don’t work anymore in today’s volatile planning environment — and poor planning affects your entire organization. You need new processes, tools, and data to support your efforts in the coming years.
Interested in learning more? Download our guide, "How and Why to Put Demand Sensing to Work in Your Hospitality Business."