Demand Forecasting

Consulting Services
- Operational Research
  - Solutions
    - Business Case Analysis
    - Business Games
    - Portfolio Modelling
    - Strategic Optimisation
    - Decision Support
    - Demand Forecasting
    - Risk Evaluation and Mitigation
    - Customer Analytics
    - Price Optimisation
    - Performance Measurement
    - Business Process Modelling
    - Simulation
    - Scheduling

The Business Issue

Business operating environments are often characterised by uncertainty about how demand will change with time. Markets are becoming increasingly competitive with the demand for many products being highly seasonal or influenced by external factors. Therefore, being able to accurately forecast future events and their impact by understanding the actions and behaviour of markets, customers and competitors would provide businesses with real competitive advantage. Forecasting drives the entire supply chain from the purchasing of raw materials to the delivery to the customers.

Organisations without effective demand forecasting functions often have to make reactive responses to business problems. Energy producers may underestimate the impact of a sudden cold spell of weather and be incapable of meeting the energy demands of all consumers, or retailers may order insufficient stock to support a planned marketing promotion and have to back order from their suppliers at increased cost and with in unavoidable lead time. In such cases, it can be seen that getting forecasts wrong can have severe penalties.

Organisations with existing demand forecasting functions may still fail to benefit fully from their investment. This can occur where:

Forecasting operations lack the support of senior management, who do not appreciate the bottom-line financial value of their forecasting operations;
Different business units within the organisation have inconsistent, customised forecasting models focussed on their own purposes
Forecasting processes are not appropriately integrated within the organisation, or synchronised with suppliers and sources of customer information.

Truly informed forecasting requires the use of appropriate techniques which can manage and organise historical data, lead indicators and user assumptions, and exploit this information to produce forecasts of future levels of demand, activity, costs or prices, as shown below.

Demand forecasting models have applications across all sectors of industry, some examples of which are outlined below:

Sector	Applications of Forecasting
Energy & Utilities	Energy demand, energy index prices, load forecasting
Travel & Transport	Demand for flights, traffic volumes
Retail	Demand for goods, new product sales, product lifecycle, inventory control
Financial Services	Stock prices, interest & exchange rates

Our Expertise

Capgemini offers expertise at all stages of a demand forecasting engagement, from diagnostic testing to application development and benefits realisation. Our comprehensive approach can assist in setting up a new forecasting operation or optimising an existing capability.

We have formed relationships with several leading technology and information providers, to ensure that our solutions are robust and powered by high-quality, accurate data management.

The table below lists our main forecasting offerings:

Competency	Activities	Deliverables
Diagnostics	Assess current forecasting performance in 9 key areas, benchmarking against best practice Identifies and assess existing forecasting models & techniques in use within the organisation Evaluate available third party packages Bespoke development to identify correct solution for specific requirements	Immediate opportunities for change and quick win improvements Transformation blueprint, outlining the organisational changes required & indicative timescales Identification of realistic forecasting requirements A high-level solution design Business case for change
Data Collection & Analysis	Assess availability, completeness and consistency of historical data in order to improve data quality. Statistics and data mining to understand behavioural patterns and evaluate sensitivity of lead indicators	Detailed understanding of organisational data, its nature, quality and consistency Understanding data patterns and inter-relationships
Modelling Analysis & Prototyping	Determine the data requirements and forecasting algorithms to optimise forecasting accuracy. Rapid development of prototype models to evaluate forecasting performance	Prototype models to quickly give confidence that the required level of forecasting accuracy can be achieved Definition of most appropriate forecasting methodology and modelling techniques to meet requirements Rules for managing data quality
Systems Development & Implementation	Ensure effective development using our wide range of experience and capabilities including programme / project management, technical expertise and quality assurance. Forecasting application testing Development of supporting business processes System and methodology training	Forecasting models integrated into existing computer systems Dedicated decision support models for use by the client’s expert staff Tested and validated forecasting algorithms Monitored data quality and forecasting performance Trained users to provide future enhancements Updated and aligned business processes and organisational structures

Our Experience

Capgemini’s demand forecasting capability lies within our Operational Research (O.R.) Group based in the U.K. The group has an unparalleled experience of solving problems and delivering solutions within a wide variety of industry sectors across Europe.

Capgemini Operational Research has created a dedicated Demand Forecasting “Centre of Excellence” to act as a focus for skill development, delivery excellence and thought leadership. This unique expertise brings together some of the leading minds in forecasting and business consulting to aid organisations to solve business problems. We are skilled in designing and building models using leading commercial software such as SAS, SPSS and Clementine.

New Service Offer

Product Demand Forecaster

Delivering business benefits through targeted improvements in product demand forecasting.

Accurate and reliable demand forecasting is key to delivering an adaptive and efficient supply chain.

A recent survey by Capgemini found many common reasons preventing an improved forecasting performance: data quality, data availability, inadequate technology, inappropriate models, manual interventions and lack of governance all rated as medium to high importance.

By using our proven diagnosis tools and modelling methods we will work with the client to rapidly:

Identify where there is potential for improving demand forecasting operations
Quantify the value of improved demand forecasting
Demonstrate the feasibility of improvements through a proof of concept

See also our downloadable Thought Leadership file: Product_Demand_Forecaster.pdf

The Business Issue

Our Expertise

Our Experience

New Service Offer

Product Demand Forecaster

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