What role does demand forecasting play in logistics planning?

Demand forecasting is a critical component of logistics planning as it provides insights into future product demand, enabling organizations to make informed decisions regarding resource allocation. By effectively forecasting demand, logistics planners can anticipate the quantity of products needed to meet customer requirements, helping to optimize inventory levels and reduce costs associated with overstocking or stockouts.

This process allows teams to align their resource needs—such as transportation capacity, warehouse space, and labor—ensuring that the right amount of inventory is available at the right time and place. Thus, demand forecasting directly informs expected resource needs, facilitating more efficient and proactive logistics operations.