Demand Segmentation Drives Forecast Accuracy, Customer Service Improvements

How companies are adopting demand segmentation and leveraging its benefits in tackling demand volatility and channel shifts is the subject of a new report, Demand Segmentation Users are Better Equipped to Manage Their Channel Challenges.

Authored by Bryan Ball, vice president and group director, Aberdeen, and sponsored by Logility, the report examines how the ability to research, compare, and purchase products across multiple channels at any time creates additional complexity that can challenge a supply chain organization’s ability to generate an accurate forecast. Aberdeen conducted this research to identify the strategies best-in-class companies employ to turn these challenges into opportunities for differentiation and growth.

The research finds demand segmentation is a key capability that sets leading supply chains apart. Highlights include:

• Demand segmentation users show a 20 percentage point customer service level advantage versus non-users.
• Best-in-class companies realize a 67-percent higher forecast accuracy rate at the family and SKU level.
• Demand segmentation users are 57 percent more likely to optimize inventory and service policies to maximize cash flow and profitability.

"Creating a demand-driven supply chain starts with understanding who your customer is and developing the strategy to profitably serve them at the time, place, and price they are ready to buy," says Karin Bursa, executive vice president, Logility.