What is Forecasting in Procurement?

In the context of procurement, Forecasting involves predicting the future demand of goods and services by analyzing historic and current data. Forecasting is used by procurement teams to make better decisions on purchasing, inventory management and production.

The goal of procurement forecasting is to anticipate future demand accurately, enabling businesses to make proactive decisions with strategic planning for contingencies to ensure that suppliers will meet the demand.
To mitigate the risk of stockouts or excessive inventory, forecasting involves tactical steps including market analysis, evaluating demand forecast accuracy KPI, developing strategic forecast models and regularly reviewing and improving.