Too many businesses overlook the potential of inventory forecasting to offer a strategic advantage. The techniques and technology required to strike the right balance are widely available, empowering businesses to manage their inventory more effectively. That should inspire business leaders to take action.
Striking a balance between having enough-but-not-too-much stock can mean the difference between success and failure for a business since inventory is often one of the largest expenses for a company.
Getting forecasts right requires a complex mix of statistical and mathematical data analysis, experience with the business, and customer insights. It also requires people who can make data-informed predictions based on factors that could cause a dip or spike in future demand. Some factors are major, and some are peripheral. Some could make an entire season, while some have only a mild effect.
Effective inventory forecasting can mean the difference between profitability and piles of unsold goods that eat up your available cash. When used correctly, companies can better plan for potential dips or surges in sales, save money on storage and keep customers happy.
Managing inventory can be a daunting task. The process and results impact every aspect of your business, so it’s not surprising that a long list of challenges can accompany the effort. Meeting the myriad inventory management challenges that arise requires analysis and methodology.
After calculating and considering the relevant metrics, businesses need to choose the right analysis technique, method, and model based on how each option matches their company’s particular situation and characteristics.
An inventory management system helps organizations account for all incoming and outgoing stock to meet customer demand better and avoid the expense of overstock or loss of business with stockouts. Creating an accurate and useful inventory forecast requires more than powerful software. It requires making several critical decisions to help ensure your forecasting efforts are successful.