Demand forecasting is the process of developing the best possible understanding and estimations about future customer demand. Forecasting demand for products and services is a tricky business. A new product may be all the rage one day, only to be replaced by something new the next. And this isn't just an issue with trends or fads either - markets are always changing. The last thing any company wants is to produce too much inventory, which ends up costing them more money than they're bringing in through sales, but at the same time they also don't want to invest too little into production, risking running out of stock when customers come calling.
The old strategy was guessing what might happen in the future based on past performance - but now thanks to artificial intelligence (AI) coupled with data sets that can predict outcomes, businesses have a whole new way of gauging demand, and it's changing the game.
"Using AI for demand forecasting really has two parts to it," explains Matt Straz , CEO of KeepTruckin . "The first is being able to take historic data - past events, past trends, past behaviors - and be able to predict what may happen in the future."
What Is AI And How Does It Work?
What is AI?
There's no one-size-fits-all answer to this question, as AI can be used in a variety of ways, but at its most basic level, AI is a process of programming a computer to make decisions on its own. This can be done by teaching the computer how to learn through data sets, or by giving it rules to follow.
How does AI work?
Again, this depends on the specific application, but in general, AI works by using algorithms to analyze data. This data can come from a variety of sources, including social media, financial reports, or climate data. Once the computer has analyzed the data, it can use it to make predictions about the future.
How Is AI Being Used For Demand Forecasting?
There are a number of ways that businesses are using AI for demand forecasting. Some companies are using it to analyze past sales data in order to make predictions about future demand. Others are using machine learning to study consumer behavior in order to anticipate changes in buying patterns. And still others are incorporating human judgment into their forecasting process in order to help forecast the unexpected.
"It's not just about utilizing historical data," says Straz, "it's being able to look at the future-state landscape of your business and change it so you can actually see what it looks like."
Why Use AI For Demand Forecasting?
There are a number of reasons to use AI for demand forecasting. The first is that, while you can take predictions from the past and compare them to what happened in the future, it's difficult to be accurate with these predictions. Plus, there are always unknown factors that come into play when predicting future trends. With AI, these unknown factors can be analyzed thanks to machine learning.
The second reason is that integrating both humans and machines will help make better predictions about the future. Rather than one or the other, humans and computers work together to make a more accurate prediction. "The combination of human and machine is really where the power comes in," says Straz.
How Businesses Are Using AI For Demand Forecasting
There are a number of different ways that businesses are using AI for demand forecasting, and each business has its own specific needs that AI can help meet. Here are a few examples:
- Maruti Suzuki is using artificial intelligence to predict future demand for what parts will be needed in their cars
- Tesla has begun using AI to predict the most efficient route possible for each car on the road
- Disney World uses AI with sensors in order to track wait times throughout the park, which helps them plan better for future crowds
- Amazon is using AI to predict what product demand will be like for different areas of their warehouses. This way they can make more efficient use of space and employees' time
- Google uses AI to anticipate how many cars might need to drive through an intersection at a specific time, making it easier for them to plan their delivery routes
The Benefits Of Using AI For Business Forecasting
There are a number of benefits to using AI for business forecasting. Some of the most important ones are:
- Accuracy: With the help of AI, businesses can make more accurate predictions about future demand. This is due to the machine's ability to analyze data in a way that humans can't.
- Speed: AI can process data much faster than a human can, so businesses can get predictions more quickly.
- Efficiency: With the help of AI, businesses can become more efficient in their forecasting process. This means they can make better use of their time and resources.
- Flexibility: AI allows businesses to be flexible in their forecasting process. They can change their predictions based on new data that comes in, and they can experiment to determine the best way for their forecasting process to work.
Artificial Intelligence's Future Impact On Businesses And Society As A Whole
It's clear that businesses are beginning to realize the benefits of using AI for demand forecasting. As this trend continues, we can expect to see even more businesses using AI to help them plan for the future. Additionally, we can expect to see more collaboration between humans and machines, as this is where the real power lies for accurate forecasting. This type of collaboration between humans and machines (AI) makes it easier for businesses to make accurate predictions about future demand. "It's not about replacing people, it's about using the best work of both to make better decisions" says Straz.
In the future, we can expect to see a lot more businesses using AI in their forecasting processes. This is one way that AI will help businesses become more flexible when it comes to planning for the future. Additionally, this will allow businesses to make more efficient use of their time and resources. AI's ability to analyze data quickly will also help speed up the forecasting process.
It's clear that businesses are beginning to realize the benefits of using AI for demand forecasting. As this trend continues, we can expect to see even more businesses using AI to help them plan for the future. In addition, we can expect to see more collaboration between humans and machines (AI), as this is where the real power lies for accurate forecasting.
To learn more about using AI for Demand Forecasting at your company, visit our website. Our DATA BOSSES are happy to help you add demand forecasting backed by AI to your business.