Boston — January 11, 2007 — A new breed of demand management technology is enabling companies to increase their market share and gross profits by enabling increased forecast accuracy, according to new research from technology consultancy Aberdeen Group.
Aberdeen based its report, "Demand Management in Consumer Industries," on research into demand management practices at more than 150 consumer industry enterprises, including consumer packaged goods, apparel, consumer electronics, consumer durables, and food and beverage.
Based on its research, Aberdeen concluded that companies using best-of-breed demand forecasting systems are three times more likely than other companies to have forecast accuracy above 70 percent.
In addition, those companies using best-of-breed demand shaping (promotion optimization) solutions are two times more likely than other companies to have increased promotion/trade-fund effectiveness over the last two years.
Finally, companies using best-of-breed pricing solutions are two times more likely than other companies to have improved gross margins over the last two years.
"Companies are achieving very rapid returns using this technology," said Nari Viswanathan, research director for supply chain at Aberdeen Group. "They are able to sense changes in consumer demand faster and respond faster. However, most companies are still unable to sense changes in demand fast enough: 50 percent of companies report that it takes more than one month for them to sense changes in demand."
Aberdeen defines best-in-class companies in demand management as those with product family forecast accuracy of 60 percent or greater and customer service levels of 90 percent or above. According to Aberdeen's research, best-in-class companies have been able to obtain much greater improvements in performance from 2004 than their peers. For example:
- Best-in-class companies are more than twice as likely to have increased market share as their peers.
- Best-in-class companies are 56 percent more likely to have improved gross profit margin.
- Best-in-class companies are 1.5 times more likely to have improved order fulfillment.