The Effect of Demand Forecasting Models on Supply Chain Planning, Inventory Planning & Performance: The Case of Unilever Ethiopia
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Date
2024-06
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Addis Ababa University
Abstract
This study aimed to understand and evaluate the effect of demand forecasting models on supply chain planning – inventory planning & performance: The Case of Unilever Ethiopia. The researcher employed a mixed-methods research approach integrating quantitative analyses of historical data from Unilever Ethiopia and qualitative insights from research questionnaires and interviews, the researcher used an explanatory and descriptive research design. Major four products from case company's product portfolio and 14 employees who are directly involved in demand forecasting were the target data and population. The study's findings showed that there is a positive correlation between the independent variable and dependent variables except inventory turnover which was not statistically significant. The organization's inventory planning and performance is impacted by the accuracy of the forecast which heavily depends on the forecast model selected. The inventory performance matrices inventory level, inventory cost and safety stock were found to be impacted by the accuracy of demand forecasting. The most common observation from secondary data and from what the respondents mentioned are inadequate and inaccurate demand forecasting led to higher inventory levels and costs significantly affecting the performance of the business. Being a global corporate company operating in different countries with various available resources and technologies, Unilever Ethiopia needs to check and adapt the forecasting model with less error to effectively manage inventory and improve the whole operational performance.
Keywords: Fast moving consumer goods (FMCG), Demand forecasting, Supply Chain Planning, Inventory Planning, Inventory Performance