Today, there is a rapid change in the supply chains and customer demand, so in the meantime, an accurate inventory forecast is important. The inventory forecast is required to predict the future demand since inventory forecasting is also called demand planning. For predicting future requirements, past data and trends will be used. For a retail business, inventory forecasting is essential for meeting the customers’ demand and earning profits simultaneously. In this post, you will see some detailed information on Inventory forecasting.
Benefits of the Inventory forecasting
Creating and updating inventory management have various benefits, and cost savings is a primary benefit in it. No one will follow some concepts and do certain works without expecting benefits from that action. When you order the most select products for your store through inventory forecasting, you can save your money on unwanted Inventory. Those unwanted products also require money to order and warehouse space, and you can save all this money with the help of inventory forecasting.
Satisfaction of customers and suppliers
Having stock on hand keeps customers satisfied and increases the likelihood of repeat business. Understanding supplier processes and timelines help you minimize stock-outs and maintain healthy relationships by reducing emergency orders and improving communication. Once you have a good relationship with both customers and suppliers, there will be no barrier to increasing the profit margin.
How many of you know the Inventory and the supply chain are inextricably linked? Yes, improved demand forecasting improves supply chain management by planning ahead of time to ensure you have the right amount of stock. It can also reduce the amount of manual labour involved in inventory and supply chain management since the reordering process will be automated. Forecasts can be kept up to date with new information as it is fed into your platform by advanced inventory management software.
Company goals can be achieved through effective communication across your enterprise, and inventory forecasting plays an important role. Viewing the previous data makes it easy to determine the needed stocks and ensure enough products are in hand. Spending more on bulk buying can be reduced with this inventory forecasting.
Types of Inventory forecasting
There are four types of inventory forecasting, and each has some different things. Here are the lists of 4 types.
- Trend forecasting -Project potential trends utilizing changes in demand for your product over time. It doesn’t account for seasonality or other irregularities in past sales data.
- Graphical forecasting – To show the sales peaks and valleys, the data predicted from trend forecasting are graphed as many forecasters prefer this graphic method for the availability of visual nature.
- Qualitative forecasting – Qualitative forecasting regularly includes focus groups and market research. The relationship between on hand knowledge of past operations and possible future operations.
- Quantitative forecasting – Accurate forecasting is possible in this type by using the previous numerical data.
Thus, the points listed above are important details about inventory forecasting and enjoy its benefit by implementing it.