Factors influencing demand forecasting and demand planning: a case at an apparel retailer.

Abstract

As supply chains and distribution channels extend globally and fashion trends become more controlled by media, customers are not only influenced to change their minds overnight about offerings but also organisations are pushed to become more flexible and agile with regard to efficient planning and forecasting for demand. Today’s supply chain management is successful when it involves the understanding and management of inventory, the complete satisfaction of the ultimate customer and also the delivery of the right quantity of product to various destinations at a faster rate. The business environment has become highly competitive and complex as customers’ demands have become significantly variable, thus pressuring organisations to invest in better demand forecasting and planning tools in order to become more responsive to these demands. The dynamics of the business environment has become one of the main challenges in the planning and forecasting of demand in apparel supply chains. Such supply chains are affected by external and internal factors such technological advancement, globalisation, economic factors, environmental unpredictability, political and legal matters, social issues, poor internal and external collaboration in the supply chains, and the supply chain structures influencing the performance of organisations in the market. This study aims at identifying the impact that each of these factors have on the apparel industry. Each factor was analysed to determine the impact on the forecasting and planning of demand in the apparel industry. The findings are based on a case study that was conducted with one of the biggest apparel retailers in South Africa, namely, Apparel Retailer A. The results of the research reveal that the factors mentioned have a more negative than positive impact on the planning and forecasting of demand within apparel organisations. It was found that Apparel Retailer A needed to invest in better collaboration systems (that allow for real time replenishment) with its supply chain partners in order to be more responsive to the unexpected changes that the organisation consistently experiences in the industry. Furthermore, participants indicated: a need to maintain consistency in the areas where the organisation was well-equipped; a need to invest in a more agile and sustainable supply chain due to the massive growth of competition in the market; and, most importantly, a need to build strategic relationships with the organisation’s supply chain partners, thus allowing the organisation to plan and forecast better for future demand.