Page 4 - Logistics News - July August 2023

AI

Does AI close the

demand forecasting gap?

By Business Modelling Associates – visit www.businessmodelling.co.za

Many analysts and industry experts are saying that we are heading into the Fourth Industrial
Revolution. One of the biggest drivers of this purported revolution is the availability of
unprecedented volumes of data and the development of computer processing power that can
leverage big data for the first time in history.

ut what does this mean for the supply chain practitioner? is that forecasting forces the business to keep track of
One of the areas where artificial intelligence (AI) can assumptions made and makes it easy to identify and adjust
B have the biggest impact is the discipline of demand incorrect assumptions, improving performance and profitability.
forecasting. For decades, organisations have been attempting to Nonetheless, many supply chain practitioners will lament
close the gap between what happens in the market and how to that “Forecasting is always wrong”, and although this is true,
gear the supply chain to be prepared for unexpected fluctuations, forecasting plays a critical role in supply chain planning and
shifts and changes. operations.

For this article, a team of supply chain professionals has Businesses that get forecasting right achieve the following:
evaluated a set of traditional and cutting-edge forecasting • Increased customer satisfaction.
methods to determine if AI can close the demand forecasting • Reduced inventory cost.
gap. • Improved production planning.

Focus on forecasting Traditional forecasting relies on statistical methods, using
Why do we forecast? Businesses rely on forecasts for decision- historical data and static, predetermined business rules to
making and planning. A benefit that is often not considered predict business behaviour for the future. According to Prevedère

2 JULY/A U GU S T 2023 www .l o g ist i csn e w s .c o .z a