Effectively managing your inventory is a critical part of ensuring overall business success. With increasing supply shortages and other challenges across many industries, it has become necessary to carefully monitor your inventory needs, including forecasting future needs to provide for your customers. An inventory forecasting solution can deliver those critical insights and give you more information about how inflation, demand cycles, and other concerns influence your business.
Just what can an inventory forecasting solution offer you? Look at these key elements.
Knowing what consumers will likely want or need to purchase in the future can go a long way toward setting your business up for success. If you do not know what customers want, it can be challenging to establish how much inventory you need on hand.
With inventory forecasting software, you can better understand what items will likely have high demand and how much you need. If you fail to order adequate inventory, it may cause you to miss out on sales.
Sometimes, you may not even recognize those lost sales opportunities since customers may leave your business and turn to someone else without ever notifying you about their intentions. Your inventory management software can help you keep up with consumer demand, including tracking things like demand lifecycles so you have the proper inventory to meet customers’ needs.
While inadequate stock can prove costly to your business, overstock can ultimately prove equally costly. When you order too much of a specific item or material, you may find you cannot use or sell it in time.
As a result, you may have to sell it off for a lower profit or, in some cases, none. Furthermore, some types of inventory may go out of date before you can use them if you do not have adequate measures to protect against this.
If you have to manage more than one location, including multiple retail spaces or warehouses, it can be more difficult to keep up with your inventory needs. Different sites have different inventory needs.
In some areas, that could mean changes in seasonal demand. Customers in warmer climates shift to summer products earlier than those from cooler climates.
In other cases, it may be because trends differ between locations. By keeping up with those differences through your inventory forecasting solution, you can ensure you have the right merchandise and do not end up with overstock in areas with lower demand for particular items.
An effective inventory management solution can also help you determine how to best transfer inventory between locations, which makes it easier for you to ship in the most efficient, cost-effective way possible.
Seasonal changes in demand are a natural part of the inventory lifecycle for many businesses. However, for you to effectively manage your inventory, you need to be able to keep up with those seasonal shifts.
Some shifts are more naturally predictable. Leading up to the holidays, for example, sales increase in many industries as people buy gifts for loved ones. During the back-to-school season, sales of electronics grow substantially.
Businesses may also note more subtle seasonal shifts related to patterns that reflect their industry specifically. Still, other businesses may operate only seasonally, which means they have high inventory needs during specific periods and lower inventory needs at other times of the year.
Inventory forecasting solutions can help predict those seasonal changes. They use historical information from past sales to help predict how inventory needs will likely change in the future.
Furthermore, your inventory forecasting solution can help predict the performance of new products based on how other similar products performed in the past. As a result, you can better prepare for seasonal shifts, which allows you to easily ensure you have the right inventory.
You may need to track supplier-related challenges as part of your inventory forecasting solution. For example, if you have not diversified your suppliers, it’s much more challenging to keep up with inventory needs when the truck driver shortage catches up to your business, and you have difficulty getting those items in time. Your inventory forecasting solution can provide insight into when to place orders, so they reach you.
Sometimes, you may have standing orders with many suppliers that ensure the same goods come to you simultaneously. Those repeat orders may have lower costs, making them a more cost-effective way to manage many of your constant inventory needs.
However, you need to know when those orders are coming in and what inventory they bring to keep up with any ordering changes you may need to make. Tracking your orders effectively can also reduce the odds you’ll accidentally over-order or fail to get an order through the system in time.
Forecasting is a crucial part of your inventory management process. By having the right inventory forecasting solution, you can better track your ongoing stock needs, preventing you from missing out on sales and keeping your customers satisfied.
Stock IQ provides comprehensive inventory forecasting as part of our overall inventory management solution. Contact us today to learn more.