How do you forecast demand for indirect purchases in a dynamic market?

1 Identify key drivers of demand

The first step in forecasting demand for indirect purchases is to identify the key drivers of demand, or the factors that influence the quantity and timing of the purchases. These drivers can be internal or external, and can vary depending on the type and category of the purchases. For example, some of the internal drivers of demand for office supplies could be the number of employees, the level of activity, or the policies and procedures of the organization. Some of the external drivers of demand for utilities could be the weather, the market prices, or the regulatory environment. By identifying and analyzing the key drivers of demand, you can better understand the patterns and trends of your indirect purchases.

2 Choose a suitable forecasting method

The next step in forecasting demand for indirect purchases is to choose a suitable forecasting method, or the technique that you use to generate the forecasts based on the available data and assumptions. There are different types of forecasting methods, such as qualitative, quantitative, or hybrid, and each has its advantages and limitations. Qualitative methods rely on human judgment and expertise, and are useful when data is scarce or unreliable, or when the market is new or uncertain. Quantitative methods rely on mathematical models and formulas, and are useful when data is abundant and consistent, or when the market is stable or predictable. Hybrid methods combine both qualitative and quantitative inputs, and are useful when data is mixed or incomplete, or when the market is complex or dynamic.

3 Adjust for seasonality and variability

The third step in forecasting demand for indirect purchases is to adjust for seasonality and variability, or the fluctuations and changes that occur in the demand over time due to cyclical or random factors. Seasonality refers to the predictable and recurring patterns of demand that are influenced by factors such as holidays, seasons, or events. Variability refers to the unpredictable and irregular variations of demand that are influenced by factors such as promotions, disruptions, or anomalies. By adjusting for seasonality and variability, you can improve the accuracy and reliability of your forecasts, and avoid underestimating or overestimating your demand.

5 Communicate and collaborate with stakeholders

The fifth step in forecasting demand for indirect purchases is to communicate and collaborate with stakeholders, or the people who are involved in or affected by your purchasing decisions. These stakeholders can include your suppliers, your customers, your colleagues, or your managers. Communication involves sharing your forecasts, assumptions, and methods with your stakeholders, and explaining the rationale and implications of your purchasing plans. Collaboration involves soliciting input, feedback, and suggestions from your stakeholders, and aligning your goals and expectations with them. By communicating and collaborating with stakeholders, you can build trust, transparency, and accountability, and ensure that your forecasts are aligned with the needs and interests of your organization.

6 Monitor and review your purchasing performance

The sixth step in forecasting demand for indirect purchases is to monitor and review your purchasing performance, or the process of tracking and evaluating the results and impacts of your purchasing actions. Monitoring involves collecting and analyzing data on your purchasing activities, such as the quantity, quality, price, and delivery of your purchases. Reviewing involves assessing and reporting on your purchasing performance, such as the savings, efficiency, compliance, and satisfaction of your purchases. By monitoring and reviewing your purchasing performance, you can identify and address any issues or gaps, celebrate and reward any achievements or successes, and identify and pursue any opportunities or improvements.