Forecast Demand for New Products With Frontier ERP Software

Launching a new product or product line is always exciting. However, one of the biggest challenges is figuring out how to forecast demand for it. Forecasting demand is crucial because it helps you to target the right audience for a successful product launch.

The right ERP software can help you with these all-important forecasts that can make or break your new product campaign. In this blog post, we’ll explore the challenges of creating new product demand forecasts and how Frontier ERP software can assist with this endeavor.

Challenges of Creating New Product Demand Forecasts

Forecasting demand for new product lines presents significant challenges for manufacturers due to the lack of historical data and market unpredictability. This uncertainty makes it difficult to accurately plan production, manage inventory, and allocate resources effectively, potentially impacting profitability and customer satisfaction. Here are some common challenges manufacturers face:

Lack of Historical Data: Unlike established products, new products don’t have past sales data to help predict future demand. Estimating how much you will sell, to whom, and when is difficult.

Market Uncertainty: It’s hard to predict how the market will respond to a new product. Trends, customer preferences, and competition can all impact demand. For example, a new style trend could suddenly make your product more or less desirable.

Changing Trends: Consumer tastes can change rapidly, making it tough to predict long-term demand. What’s popular today might not be popular tomorrow, so you need to stay flexible.

Production Capacity: Ensuring you have the right production capacity to meet demand without overcommitting resources can be tricky. You don’t want to make too much and have extra inventory. But you also don’t want to make too little and lose sales.

Key Steps When Forecasting New Product Demand

In a best-case scenario, manufacturers forecast demand for new products before development. However, if the new product is an upgraded version with additional features, you could complete your forecast during development. Regardless, the importance of having a demand forecast is not diminished.

By considering the following steps, you can improve the accuracy of new produce line forecasts. The results will help ensure better inventory management, optimized production schedules, and successful market entry.

Market Research and Analysis:

• Identify Target Market: Understand the demographics, preferences, and needs of your target audience.
• Analyze Market Trends: Examine industry trends, economic indicators, and consumer behavior to gauge potential demand.
• Competitor Analysis: Study competitors’ products, their market performance, and strategies.

Historical Data and Similar Products:

• Use Similar Product Data: If available, analyze sales data of similar or comparable products to predict new product demand. For example, check your sales data from ottomans with removable tops. This is important if you are launching a new, more expensive hinged-top version.
• Adjust for Differences: Consider differences in features, market conditions, and target audience between the new product and equivalent products. An article from Supply Chain Management Review notes, “Planners should recognize that forecasting for new product families often involves SKU-level spread bias. For this reason, it is essential to differentiate the demand planning process for new product families from that of existing products.”

Customer Feedback and Surveys:

• Conduct Surveys: Survey current and potential customers to gather insights about their interest and willingness to purchase the new product.
• Pre-Orders and Pilot Launches: Gauge interest through pre-orders or small-scale pilot launches. Take a page from fast-food restaurants that test-market new products in specific regions.

Scenario Planning:

• Develop Scenarios: It is critical to create multiple demand scenarios (best-case, worst-case, and most likely) to account for uncertainties.
• Evaluate Impact: Assess the impact of different scenarios on production, inventory, and supply chain so you are completely prepared.

Seasonality and Trends:

• Seasonal Adjustments: Consider seasonal factors and trends that might affect demand.
• Trend Analysis: Identify and analyze long-term trends that could influence product demand over time. This is especially true if you develop a product that solves a common problem for customers. For example, mirrored bathroom cabinets with device charging stations.

Technological and Economic Factors:

• Monitor Technological Advances: Stay updated on technological changes that could impact product demand. Take smart doors over clunky remote controls as an example.
• Economic Indicators: Keep an eye on economic indicators such as GDP growth, employment rates, and consumer confidence. If nobody can afford your product, it won’t sell.

Supply Chain and Production Capabilities:

• Assess Supply Chain: Ensure that your supply chain can handle the forecasted demand. If you can’t source the latest materials for your new line of window blinds, you’re stuck.
• Production Capacity: Verify that your capacity aligns with demand forecasts to avoid production scheduling issues.

Marketing and Sales Strategies:

• Marketing Plans: Develop marketing strategies to stimulate demand and create awareness. Your current customer base is the best go-to.
• Sales Channels: Identify and plan for the sales channels that will be used to reach customers. Social media is a great place to hit the 18-25 crowd for your new line of dorm-room decor.

Continuous Monitoring and Adjustment:

• Monitor Sales Data: Continuously track sales data and market feedback after the product launch. Are orders being processed quickly? Are deliveries on time? Have there been any quality issues with your new products?
• Adjust Forecasts: Regularly adjust forecasts based on real-time data and market conditions. For example, if you launch new residential windows in the Rockies and a 100-year snowstorm hits, you need to change your forecast.

Frontier ERP Software Facilitates New Product Demand Metrics

Despite the complexity and challenges, Frontier ERP software helps many industries forecast demand for their new products. The following are just a few key examples of how:

Real-Time Data

Frontier ERP’s real-time, centralized data capabilities significantly help manufacturers predict new product demand. By eliminating data silos, Frontier gives manufacturers quick access to crucial, up-to-date information from all departments in one place. The seamless integration of real-time data ensures that all relevant information is considered in the forecasting process. This helps you spot trends and patterns in customer behavior, sales, and market conditions.

Moreover, Frontier’s real-time data allows for dynamic forecast adjustments based on current market conditions and consumer preferences. This agility is crucial for responding to unexpected changes in demand or supply chain disruptions. If you notice a sudden spike in sales, you can quickly ramp up production to meet it. Automated updates also reduce the risk of human error and ensure that forecasts are consistently accurate.

Advanced Analytics & Reporting

Frontier ERP provides powerful analytics and reporting tools to examine historical sales data, market trends, and other relevant information. By looking at data from similar products or markets, you can better understand how your new product may perform. For instance, sales data can indicate how similar products performed, while marketing data can show customer interest levels. This helps in understanding potential demand and setting realistic sales targets.

Collective Forecasting

Frontier ERP enhances collaborative forecasting by integrating inputs from other departments to forecast demand more effectively. Sales and marketing teams contribute insights into upcoming promotions, customer behavior, and market trends, which Frontier ERP incorporates into the forecast.

Additionally, input from the finance team on budget and financial projections helps align forecasts with financial goals and constraints. This provides a holistic and strategic approach to predicting new product demand.

Resource & Capacity Planning

Frontier ERP software plays a crucial role in supplier coordination to support new product demand forecasts and optimize inventory management. By enabling smooth communication with outside partners, businesses can share demand forecasts with suppliers through Frontier ERP. This helps make sure that raw materials and components are delivered on time. This way, you can meet expected demand and reduce supply chain issues.

Additionally, the system helps maintain optimal inventory levels, preventing both overstocking and stockouts, thus enhancing overall supply chain efficiency. Based on your forecasts, you can then allocate resources more efficiently. This includes everything from raw materials to labor and production schedules. That way you don’t max out your capacity while still meeting forecasted demand.

Post-Launch New Product Monitoring

Frontier ERP software helps you monitor post-launch product performance as well.

• Sales Tracking: Use Frontier ERP to track real-time data on your new product sales. It allows you to compare actual sales with your forecasts to see your predictions’ accuracy. This allows you to quickly identify any discrepancies and adjust your strategy accordingly. Frontier provides you with immediate feedback on new product launches and allows you to fine-tune your strategies quickly.
• Customer Feedback: Collect and analyze customer feedback with Frontier ERP to understand what’s working and what’s not. This can provide insights into improving the product or marketing strategy. For instance, if customers love a particular cabinet feature, you might emphasize it more in your promotions.
• Performance Metrics: Monitor key performance metrics like sales volume, revenue, and market share with Frontier ERP software. Collected data can then be used to assess your product’s success. Tracking these metrics helps you understand how well your product is performing and where improvements can be made.
• Adjusting Strategies: Based on Frontier’s analytical reports, adjust your production, marketing, and sales strategies as needed. If the product is performing well, consider ramping up production. If not, identify the issues and make necessary changes. This could involve tweaking the product design, changing the pricing strategy, or increasing marketing efforts.
• Continuous Improvement: Powered by IBM iseries/AS400, Frontier ERP is particularly helpful with continuous improvement processes. Use the insights gained from monitoring and analyzing ERP data to continuously improve your forecasting process. This might involve refining your data collection methods or improving collaboration between departments.

Conclusion

It can be quite challenging to forecast demand for new products, but with Frontier ERP software, it becomes much more manageable. Remember, the key is to use data and insights to make informed decisions at every step of the process.

Contact us to learn more about how Frontier ERP can help you forecast demand for successful new product launches.