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Part 4: Benefits of Better Logistics Forecasting

Unlock your supply chain potential: understand the benefits of strong logistics forecasting.

This post is part of our series on logistics forecasting and demand planning in the supply chain. Visit our introduction page for an overview of what we're covering and links to each part of our research.

Key takeaways


  • Accurate logistics forecasting optimizes inventory levels, reducing tied-up capital and infrastructure costs
  • Forecasting enables better risk management by modeling multiple supply chain scenarios and impacts
  • Increased product availability from forecasting drives competitive advantage and enhances customer service
  • Cost control from forecasting leads to higher revenues, profit margins, and more realistic budgeting

The benefits of good supply chain forecasting

It requires significant time, effort, goodwill, and resources to solve challenges and make improvements to logistics forecasting. Supply chain stakeholders must be able to demonstrate the benefits of forecasting initiatives to support a good ROI and business case for change. 


Although benefits are likely to be seen throughout the supply chain, some of the key improvements will be:


  • More accurate stock levels resulting in efficient use of funds in purchasing, transporting, and storing products
  • Accurate budgeting to put aside enough funds and improve the financial health of the business
  • Preparation and contingencies for common and unusual supply chain scenarios to mitigate risks and reduce logistics disruption
  • Better understanding of lead times and potential delays to allow for more accurate order management and restocking
  • Careful balancing of supply and demand management to ensure that stock levels are aligned with manufacturer capacity and consumer demand
  • Greater cost control leading to enhanced revenues and profit margins
  • Improved product availability to boost competitive advantage and ensure consumers have access to the goods they want to buy
  • Stronger customer service due to managing consumer expectations about product availability


Here’s how these benefits come together to drive advantages in your business.

Warehousing workers

Less operational capital tied up in inventory and infrastructure

Free cash flow means that businesses have more resources to expand and practice good financial management. Accurate logistics forecasting means that stock levels and consumer demand are closely aligned, resulting in less capital being tied up in unsold products.


There are benefits from infrastructure savings too—right-sizing stock levels results in more efficient use of storage space, transportation, and the supply chain network. It also allows for future planning around areas including the warehouse and logistics labor force required to handle changing demand levels.


Lower supply chain risks due to multiple projected scenarios and impact analysis

Forecasting over different time frames and taking into account multiple internal and external factors results in a much more solid foundation for understanding the likelihood and impact of supply chain risks. This allows stakeholders to more accurately balance mitigation and contingency plans based on the most likely outcomes.


Greater competitive advantage due to increased product availability 

Consumers have come to expect near-instantaneous availability or next-day delivery for products—if they can’t get the product from you, it’s easy for them to go to a competitor. Logistics forecasting ensures there’s enough inventory to meet demand and helps get goods closer to the consumer. This enhances consumer perceptions and customer service, building trust in your brand and products.


Stronger focus across multiple distribution channels

The modern enterprise is expanding far beyond traditional, brick-and-mortar retail. The enormous shift towards e-Commerce, together with omnichannel selling through social media or via third-party marketplaces are increasingly dominant. Forecasting accounts for all of these unique needs, allowing for precise, fine-tuned control of inventory and products, aligned to distribution channels.


Higher revenues and profit margins from stronger cost control and realistic budgeting

Logistics reporting places a greater focus on cost control, as efficiencies in the supply chain directly contribute to less waste. Greater cost efficiencies, combined with meeting consumer demand results in higher revenues and profit margins. Businesses can also take advantage of multiple scenarios and forecasting timelines, allowing for more realistic budgeting over the short-, medium-, and long-term. 


Increased confidence in lead times and “just in time” manufacturing

Closer alignment with suppliers, figuring in lead times, and understanding potential delays means you can be more confident that stock will be where you need it, when you need it. This reduces reordering life cycle times and allows for more investment in “just in time” manufacturers that can help you reduce costs further. You can also model end-to-end lead times, from initial ordering through to final distribution, and optimize the demand/supply lifecycle.


Preparing supply chain partners to send, receive, and process goods

Increased visibility, transparency, and timeliness of forecast data mean that suppliers, manufacturers, and logistics providers can plan more easily. This also makes the upstream and downstream impacts of disruptive events much more predictable, allowing for quicker recovery from incidents.


Closer alignment to consumer and marketplace trends and behaviors

Consumer and marketplace demand can change quickly, based on multiple trends and factors. Strong logistics forecasting reacts quickly to these changes, allowing for rapid replanning to balance supply, capacity, and demand.


Quantifying the benefits of better logistics forecasting

The consolidated benefits of improving logistics forecasting accuracy can deliver significantly higher revenues and profits. Although forecasting ROI differs significantly from industry to industry, some studies have helped quantify some overall benefits.


According to information from the Institute of Business Forecasting and Planning


  • A 15 percent improvement in forecasting accuracy will deliver a three percent or better improvement to the bottom line
  • A one-percentage-point reduction in forecasting errors at a $50 million turnover company provides savings of around $1.5 million if they were under-forecasting, and around $1.3 million if they were over-forecasting
  • Improving forecast accuracy, inventory availability, and demand management increases revenue by between 0.5 and three percent


Read the previous post in our series: optimal strategies for logistics forecasting or the next post in our series: how to improve your logistics forecasting.

How GEODIS can help

Unlock the full potential of your supply chain with our advanced logistics solutions. From cutting-edge technologies to proven processes and global expertise, we have everything you need to optimize your operations and drive long-term success. Contact us today to learn more.

Paul Maplesden

Paul Maplesden

Lead Content Strategist

Paul deeply researches logistics and supply chain topics to create helpful, informative content for our US audience. Read Paul's work in the GEODIS blog, our in-depth GEODIS Insights reports, and our case studies and white papers.