Top 5 Forecasting Tips For the Food and Beverage Industry

Forecasting is the method of predicting the volume of sales of a product for a specific period of time in the future, may that be a day, week, month or even years. The process of forecasting involves taking into consideration a number of factors which may directly impact sales. These include past sales, holidays, seasons, or even a global pandemic. The food and beverage industry is often derided for its unique challenges; raw ingredient perishability, volatile commodity pricing, and ever shifting consumer demands and tastes. But here we list the top 5 forecasting tips you can adopt to ensure your food and beverage products can always accurately meet their demand. 

1. Embrace Digital Software Solutions

In 2021’s challenging landscape, the use of conventional demand management tools such as Excel sheets simply aren’t good enough. Inputting data into a spreadsheet, even if it’s accurate, is simply not a sustainable or useful method of recording historical sales data. And it is this very data which can become one important tool in predicting future demand. Today supply chain planning, traceability, demand forecasting, and management software can carry the load for you. 

2. Don’t Focus Entirely on Sales

Many food and beverage manufacturers make the simple mistake that forecasting should be built on sales, when the reality is that it should be built on demand. Yes, it’s true that sometimes the difference between sales and demand is very small, but this doesn’t mean you should forecast based on sales. For example, if you failed to source a vital ingredient for 1 month. This would in turn mean you couldn’t make sales for 1 month. If you looked back on historical sales data, you wouldn’t appreciate that there wasn’t actually a reduction in demand for your product. Forecasting requires nuance, and should always be focused on demand.

3. Empower Your Enterprise Through Blockchain Technology 

By 2024 it’s predicted that the global food industry could save $31 million if companies invest in blockchain technology to monitor their supply chains. A blockchain is a digital ledger that is stored securely and records transactions simultaneously across all of the computers in a given network.  Importantly, blockchain provides the food industry with the opportunity to trace the entire lifecycle of food products from origin, through every single point of contact, all the way to the consumer. This “farm to fork” knowledge bolsters a retailer’s safety and credibility. Blockchain technology is by extension a method to sure up your food and beverage supply chain and thereby bring efficacy and strength to your forecasting process. 

4. Understand Seasonal Factors

Seasonal factors are an important consideration when forecasting. Seasonal weather changes and national holidays all have a seasonal influence on demand levels. Seasonal demand forecasting can be incredibly challenging.

But you should focus on which products are impacted by seasonal demand fluctuations, understand when these peaks and troughs will occur, and accurately forecast the relative size of these changes in demand vis-à-vis the normal demand levels. 

5. Collaborate Across the Supply Chain

Accurate forecasting results can also be achieved by strong collaborations across your whole supply chain. Information exchange is vital for a smooth production and distribution process, and you should actively share as much information with your suppliers as possible. Share your ordering plans and any other pertinent information about future fluctuations in your personal demands. 

If your food and beverage company is looking to establish highly accurate foresting measures, and to scale and grow via ERP solutions, traceability and demand planing software, get in touch with Cashmere today.