How to Accurately Predict Demand in the F&B Industry?

June 19, 2024 · 10 minutes
Accurate Demand Planning & Forecasting
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How much should you produce or purchase at a time? 

This question plagues decision-makers in the Food & Beverages (F&B) industry.

Products such as fruits, vegetables, dairy, confectionery, and bakery items are highly sensitive, requiring meticulous handling due to hygiene and nutritional concerns, alongside their limited shelf lives.

Demand fluctuations and narrow profit margins further complicate matters. Inaccurate forecasting risks overstocking—leading to increased waste—or understocking, resulting in missed sales opportunities.

In the US alone, food waste totals nearly 106 million tons annually, with retailers, wholesalers, restaurants, and food services contributing the most. These figures underscore the national issue and the operational challenges faced by businesses caught in the cycle of inaccurate demand forecasting.

The solution lies in enhancing demand forecasting precision and developing a demand-driven supply chain planning process within the F&B sector. 

But how can you achieve accurate demand forecasting, and how should you integrate it into your planning processes?

Explore these insights in our blog through the lens of how ThroughPut AI has empowered sensitive food producers to manage supply chain complexities with AI.

ThroughPut AI Demand Sensing_Accurate Demand Planning & Forecasting

Why is Technology-led Demand Planning and Forecasting So Important for the F&B Industry?

Benefits of accurate demand planning & forecasting

We can’t stress enough the importance of accurate demand planning and forecasting for the F&B industry.

Managing this complex landscape manually isn’t easy or advisable, especially in today’s age where technology can significantly enhance this process. 

Embracing technology-led demand forecasting and planning offers clear business benefits.

Clearer Customer Insights

Technology-led demand forecasting and planning is crucial for the F&B industry, given the complexity of mapping critical market and consumer knowledge.

By leveraging advanced demand forecasting and planning tools, F&B businesses can streamline merchandising and enhance supply chain efficiency, the way no manual process can do.

Understanding consumer trends and preferences enables strategic decision-making in distribution and production, minimizing risks of stockouts and overstocks.

This not only reduces waste and optimizes inventory levels but also enhances customer satisfaction and boosts business profitability.

Better Understanding of Forecast Variations

One of the biggest challenges faced by F&B businesses today is forecast variations. 

Inaccurate predictions, especially for seasonal and short-lifecycle products, can severely impact operations.

To mitigate these risks, the F&B sector must harness advanced analytics and machine learning. These tools analyze historical, near-term, and real-time data, along with external factors like seasonal shifts and economic trends, enhancing demand sensing capabilities.

Improved Product Alignment

Accurate demand planning and forecasting are pivotal for precise product alignment in the F&B industry. Traditional methods often fall short in achieving this alignment due to their limitations in handling the complexity of consumer behavior and market dynamics.

Incorrect alignment of product-oriented strategic mix and assortment goals can hinder the development of robust customer-centric merchandising plans.

Accurate demand forecasting enhances businesses’ comprehension of consumer preferences and market trends.

This understanding facilitates the design and creation of appropriate product lines aligned strategically with demand forecasts, mitigating risks of stockouts and overstocks.

By optimizing inventory levels and minimizing waste, F&B businesses can enhance customer satisfaction, boost sales performance, and gain a competitive edge in a dynamic market environment.

Better Alignment With Business Demands

In the F&B industry, traditional methods often struggle to achieve a balanced reconciliation between commercial goals and fluctuating business cycle demands, leading to inefficiencies.

However, with technology-led forecasting solutions, businesses can synchronize production, inventory, and supply chain operations precisely with both demand patterns and commercial objectives. Advanced analytics and machine learning enable accurate predictions based on historical data, real-time insights, and external factors such as seasonal changes and economic trends.

By achieving this precise balance, F&B companies can avoid pitfalls like stockouts or overproduction, ensuring products are consistently available to meet customer needs at optimal times and prices. 

So, how can technology-led demand forecasting and planning improve the accuracy of predictions and enhance the efficiency of the planning process? 

In the next section, we’ll draw from our experience in solving these challenges for F&B businesses with our AI-powered decision intelligence software, ThroughPut AI.

How to Accurately Predict Demand in the F&B Industry with ThroughPut AI?

“Without halting any on-going digital implementations or throwing out existing systems, ThroughPut provides a much-needed solution to rebalance the entire end-to-end supply chain flow on a single platform that incorporates existing siloed data stores, systems and warehouses. The ThroughPut Demand Sensing Module provides the “true North” for supply chains to fulfill.” 

Ali Raza, CEO of ThroughPut 

ThroughPut AI’s Demand Sensing Module is a data-driven solution for planning and forecasting, meticulously analyzing and correlating demand insights to swiftly address fluctuating margins and inventory needs.

Demand Sensing_ThroughPut

Unlike traditional tools, ThroughPut AI empowers you to predict near-future demand patterns with precision (& in response to the current times we live in), optimizing material flow, processes, output, and cash flow across your integrated supply chain.

At a more strategic level, supply chain leaders can also conduct rapid analysis and correlation of demand-based insights in intuitive formats, improving product mix and service availability while maximizing revenue margins.

In short, ThroughPut AI not only enhances demand planning and forecasting accuracy but also enables agile responses to market fluctuations by swiftly identifying trends through a comprehensive analysis of historical data and enabling you to respond in real time.

Capabilities that have been of particular interest to F&B customers over time are:

  • AI-driven dynamic customer segmentation throughout the product life cycle
  • What-if simulations for strategic offer optimization and targeted customer positioning
  • Demand-based planning and forecasting leveraging comprehensive historical and real-time data

Let’s understand the workings of the tool a little bit better.

ThroughPut AI’s Software Highlights for Demand Forecasting

Connect the Dots Between Past, Present, and Future & Make Informed Demand-driven Decisions

Demand Planners can quickly explore hidden demand patterns and trends to create responsive and agile supply chains to meet near-term demand. 

Using ThroughPut’s proprietary AI, you can: 

  • Quickly identify, analyze and understand disruptions in the supply chain that resulted in significant lost sales vs. areas where the impact of poor performance had minimal losses 
  • Get prioritized recommendations based on time and effort for the most significant Return On Investment 
  • Receive timely warning signals on the parts of the supply chain ecosystem that require attention and can potentially be impacted by sudden shifts in behavior caused by supply, demand, operations, or delivery performance.

The benefits of precise demand sensing eliminate the need for time-consuming manual efforts and streamline operational priorities. 

Analyze inventory accurately with relevant ABC/XYZ Segmentation 

An ABC/XYZ segmentation of sellable products or services based on demand and grouped based on geo-location along with month-on-month product mix tracking and sales/contribution margins helps you identify products at risk. 

These critical recommendations arm you to create a truly demand-centric inventory strategy, thus preventing over- and under-stocking of the high-performing products vs. the low-performing laggards.

SKU health from the demand stability standpoint 

ThroughPut AI provides a detailed overview of the sellable products by SKU/POS location, highlights the top-performing and underperforming SKUs, and focuses on the main performance metrics, including On-Time and In-Full (OTIF) and On-Shelf-Availability (OSA) per segment. 

This enables you to prioritize improvement efforts based on the actual impact on Sales Throughput.

Leverage working capital reduction opportunities 

Demand planners need a holistic approach using data right from a granular level to a panoramic view to make informed product-mix decisions. 

With ThroughPut AI’s Demand Sensing Module, you have this data at your fingertips. 

A multi-dimensional view drives accurate data-driven decisions from the ground-up, enabling better productivity and collaboration and helps you work through omni-channel complexities with robust demand sensing techniques, saving costs.

Eliminate operational waste by calculating procurement vs. wastage

The Demand Sensing Module also generates forecast plans, recommending inventory levels and operations plans that match the market sentiments at a given point in time. It lets you keep the operations costs under control, as a result. 

You can also consider external influences including economic, geographical, and climatic consequences. 

You can, therefore, accurately quantify your input vs. output without incurring wastage. 

It helps you stay optimally stocked irrespective of erratic shifts in market behaviors and patterns. 

Simplify customer mix 

ThroughPut AI unlocks opportunities to simplify customer mix to differentiate top performers, while also encouraging customers to increase business and cut down variance and waste.

ThroughPut AI’s Benefits

“The shocks from the COVID-19 pandemic have been multifold – from ups and downs in the demand to choking supply chain capacity to creating extended lags across the supply cycle. ThroughPut’s Demand Sensing solution, coupled with deep understanding of the operational flow, can quickly enable companies to build resilience against future demand and supply chain shocks in the post-covid world.”

Eli Schrangenheim, World-renowned Theory of Constraints Expert and Throughput Economics Author

In short, here’s a look at the benefits you can expect:

  • Transform raw sales data into operational insights at unmatched speed and scale
  • Assess the ability to meet future demand, highlight risks and propose mitigation strategies
  • No more stock-outs or excess inventory, with enough working capital to accelerate the speed of your business with accurate stock levels
  • Streamline operations across end-to-end supply chain for better collaboration and higher productivity
  • Succeed with a single source of truth and meet customer demand on time every time without getting stuck with unsold inventory
  • Powerful reporting capabilities to make timely decisions for demand excellence
  • Ease of integration and implementation offer faster time to value to ROI
  • Drill down visibility across sales, marketing and promotion initiatives for integrated business planning efforts across go-to-market initiatives at a local and global level

Case Study: Accurate Demand Planning & Forecasting With ThroughPut AI

Church Brothers Farms faced significant business challenges due to poor demand forecasting coupled with product perishability, volatile market conditions, demand seasonality, unpredictable weather, lack of granular visibility, and logistics issues.

These factors highlighted the critical need for accurate demand forecasting, especially in the near term, to optimize their product mix, reduce wastage and boost profitability. Effective demand forecasting that would consider multiple internal and external factors became essential to ensure operational efficiency.

ThroughPut AI collaborated with Church Brothers Farms, leveraging historical data from diverse sources to deliver precise and advanced forecasts.

By identifying the best timelines, workflows, and routes for order fulfillment, the company minimized operational disruptions and product wastage.

This approach allowed them to pinpoint periods of highest and lowest sales product-wise, gaining insights into the demand impact for each case, ultimately enhancing their overall profitability and operational efficiency.


  • Short-term forecasting accuracy improved by 40% vis-a-vis traditional time-series forecasting
  • Achievement of the 5 R’s: The right stock at the right quantity at the right cost available at the right time and the right location

FAQs About Demand Planning & Forecasting 

What is Demand Sensing & why is it important for the F&B Industry?

    Demand sensing works with real-time data for accurate short-term and near-term demand planning and forecasting. 

    It is of utmost importance in the F&B industry so that businesses can understand demand fluctuations and quickly respond to consumer behavior changes. 

    This helps reduce waste and achieve optimal inventory levels.

    Do’s and don’ts about demand forecasting in the F&B industry?

      The use of historical data and trends and advanced analytics are a must to enhance accuracy in demand forecasting in the F&B industry. 

      The tool also needs to consider short-term and near-term data along with past trends, and take into account market dynamics and external factors like economic shifts, and demand seasonality.

      How to get buy-in for investing in a demand forecasting tool?

        For buy-in, you should start small, observe and measure performance of the tool in forecast accuracy, demonstrate and present it to key stakeholders. 

        Showcase realistic results achieved through case studies. 

        How much does ThroughPut AI cost?

          The best thing about ThroughPut AI is that you can start small and then scale up. 

          Contact us to discuss your requirements and get a customized quote.

          Is ThroughPut AI applicable for my Industry?

            ThoughPut AI’s Demand Sensing Module is designed to meet the needs of the F&B industry with its advanced forecasting capabilities. 

            It can also be used across various industries including retail, cement, manufacturing and more because accurate demand planning and forecasting is a much-needed base for boosting productivity, customer satisfaction, and business optimization for all verticals.

            Conclusion: A Demand-driven Approach to F&B Supply Chain Management

            In an industry where product shelf life is critical, the advantages of a demand-driven approach to supply chain management cannot be overstated.

            In fact, aligning supply chain planning with demand is not just a strategy but a necessity in today’s dynamic market.

            By prioritizing accurate demand forecasting, F&B businesses can optimize operations, minimize waste, and enhance customer satisfaction.

            Embrace the demand-driven future to unlock efficiency and competitiveness in your supply chain today.

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            Anita Raj
            Product Marketing Specialist