Human behaviour is largely unpredictable but when it comes to product demand, knowing a few typical patterns can help improve forecasting accuracy. Here is a quick guide.
1) Weather
Never underestimate the value of a perfectly temperate day. Evidence shows that rain keeps people away from brick-and-mortar stores, but it may see them getting online in search for waterproofing solutions. Sunshine can make people drift away from their desks and into the outdoors, charged with a sudden urge to buy ice cream. In the UK, these effects can be intensified by the unpredictability of the weather. Studies have even shown that when the weather is turbulent, consumer variety-seeking increases.
2) Payday
Traditionally, the last Friday of the month has been associated with a payday spending binge. Today, things are more complex. 15% of the UK population works from home, and this means that their payments may be sporadic and unpredictable. The old mantra that companies can rely upon an influx of purchases at the end of the month is no longer applicable. However, the final weekend of the new month still tends to be more profitable than the third. These types of pattern can be detected and analysed by software, and inventory management can be tweaked accordingly.
3) Seasons
Every industry has its season. Learning to navigate these is crucial to inventory planning. For instance, it is reasonably easy to predict that Christmas is going to be busy. However, consumer behaviour can be slightly more complex, and getting the supply chains on target can be problematic. Some products and services have a neat turnaround of a month, while others can take nearly sixteen weeks to get from A to B. Good inventory management is the key to navigating seasons. With high-quality planning, supply chains can be optimised to avoid seasonal disappointments.
4) Economics & Politics
Well-known wildcards in the Porter’s Five Forces model, a slump in the pound or a political shift can have a major effect on consumer behaviour. Research suggests that economics and politics introduce major uncertainty factors into the consumer experience, and therefore into the supply chain as a whole. This makes forecasting and inventory management problematic. However, advanced software can see through the uncertainty and detect stable patterns.
Next Steps
For more information about how behaviour fluctuations influence your business, get in touch with one of our forecasting specialists today.
