5 Benefits of Using Demand Forecasting to Optimize Staff Schedules
Most organizations experience periods of peak and low labor demand. From holidays to weather, throughout the day, week, month and year, many seen and unforeseen factors influence the ebb and flow of business. Labor forecasting can benefit any industry with varying volume demand — think manufacturing, healthcare, and staffing, for example.
Demand variability is ubiquitous in manufacturing industries. Many plant operators, therefore, staff at high levels due to the difficulties in adjusting work schedules when demand increases. Scheduling the right number of people at the right place and time is a complex process to balance. Losing sales due to understaffing or incurring higher labor costs resulting from overstaffing can have a significant impact on the bottom line.
According to Gartner, companies that excel at demand forecasting have:
- 15 percent less inventory
- 17 percent better order fulfillment
- 35 percent shorter cash-to-cash cycle times
- 60 percent higher profit margins
What Is Demand Forecasting?
Demand forecasting predicts how busy an organization will be at any future moment. In addition to calculating seasonal changes, supplier forecasts, and historical sales trends, plant managers can use demand estimates to schedule the optimal number of employees to avoid understaffing peak periods or overstaffing slow ones.
Depending on industry needs, the more data you can apply to the problem, the better your demand forecasts will be. Let’s look at the top reasons to invest in automated demand forecasting for scheduling optimization:
1. Reduce Costs
Have you seen idle crew members standing around doing nothing? While it’s important to serve customers, scheduling too many employees is an avoidable expense. At the same time, businesses must know the right number of staff members needed to serve customers during peak demand.
2. Improve Service
Every organization that serves customers needs effective, timely service. The more complex the product, the greater the need for customer service. From shoes to computers, and medical supplies to food products, meeting production and delivery commitments is essential.
3. Increase Business
Satisfied customers are profitable customers, so it makes sense that revenue is closely tied to service. B2C companies can miss revenue goals or experience higher returns. Unsatisfied clients of B2B companies may cancel contracts or choose not to renew. The ability to forecast labor accurately optimizes for the highest revenue potential at the lowest cost.
4. Higher Engagement and Lower Turnover
Finding, hiring, or training new employees is costly. Whether scheduling too few work hours or sending workers home due to a lack of work, poor scheduling leads to low morale and high turnover. Optimized schedules created with transparency are reliable and reduce uncertainty in workers’ lives. This improves job satisfaction, keeps workers engaged, and, ultimately, makes the businesses more profitable.
5. Meet Regulatory and Compliance Obligations
The process of applying demand forecasts to employee schedules compels plant operators to document legal obligations, like covering breaks and lunches, and binding agreements, such as union contracts. While businesses should already do this, the exercise of programming regulatory obligations into the staff scheduling process will help mitigate costly compliance issues.
The Role of Technology
Just like calculators and spreadsheets reduced the use of pencil and paper to solve equations, cloud-based applications can quickly compute complex demand forecasts and staff scheduling scenarios. Once available to only the largest enterprises, any business can now access advanced scheduling technology with demand forecasting capabilities.
Intelligent employee scheduling technology makes it easy to enter your organization’s historical data, or connect with other applications and databases, giving you access to more accurate demand forecasts and optimized employee schedules – in minutes instead of hours.
