As businesses and operations scale, they need to examine the accuracy of their inventory management and forecasting processes. Demand forecasting goes beyond simple estimates of product demand, looking into intricate patterns overtime to produce more accurate and timely predictions. Through better demand, an organization will be able to manage inventory better, increase revenue, and improve customer support. As businesses and processes scale, they need to investigate the accuracy of their inventory management and forecasting processes.
What is Inventory Forecasting?
Inventory forecasting involves mapping and maintaining stock levels required to complete customer orders. You do this by estimating how many products you’re likely to sell over a specific period. Managers use past sales data – taking into account future promotional campaigns, various external factors, and holiday items – to accurately predict inventory levels.
Advantages of Forecasting in the Supply Chain
Current forecasting technology uses artificial intelligence and machine learning to help companies plan. Instead of having to adjust your inventory based on customer needs manually, you can use past samples of inventory data to determine consumer demand patterns. Even models such as holiday purchasing can be accounted for, helping modify your projected demand based on previous years as well as current market trends. It can be challenging to perform such forecasting manually, as large amounts of data need to be taken into account. A specific product or SKU may presently be in decline but may see a boost every holiday season. A manual or traditional model of inventory management may be limited to the past few months, and therefore recommend that you cut back on supply. An inventory management system digs deeper and will realize that the product’s demand will likely boost during the holiday season even though it’s currently in decline. While a business owner will be able to recognize these types of trends over their highest profit or most notable items, it’s unlikely that they will be able to notice those trends over hundreds or thousands of inventory items—and that could result in lost revenue. Advanced forecasting makes it possible to capture these insights, even over the most significant amounts of inventory and particularly complex inventory chains.
Talk With Taylor
Don’t turn a blind eye to inventory forecasting. Without proper inventory management, you could miss on the many cost-saving opportunities and benefits that come with inventory forecasting and supply chain management. Talk with Taylor today!
