The key to successful forecasting is understanding the purpose of forecasts. Forecasts are not predictions. They are designed to help you plan your inventory levels so that they match customer demand, which in turn helps you reduce inventories and lower your costs. Forecasting is an art and a science that requires both creativity and analysis. The best forecasters have learned how to combine these two skills into one powerful forecasting process.
However, in this article, we will share the top 13 inventory forecasting tips:
1. Make sure you have accurate inventory counts
One of the most important things you can do to ensure your inventory is accurately forecasted is to make sure you have accurate inventory counts. Without accurate counts, it will be difficult to identify discrepancies and make corrections.
2. Use historical data to predict future trends
Using historical data can be helpful in properly predicting future trends. Look into what your inventories were like the previous year to determine what you will need for this new year.
3. Track inventory costs
Inventory costs are extremely important because it is one of the biggest expenses a company has. Tracking inventory costs throughout the year can help you figure out where money has been spent and what changes can be made in the coming year.
4. Track inventory trends over time
Tracking your inventory trends through time can aid you in forecasting inventory for this upcoming year. If you see a drop, it may be helpful to increase next year so there is less risk of running out.
5. Utilize the software
Utilizing software to forecast inventory is a great way to stay organized. There are a variety of programs that can help you keep track of your stock, what is selling, and when you will need to reorder items.
6. Use forecasting tools
There are a number of different forecasting tools that can be used to predict inventory needs. A few examples are total cost forecasting, ABC inventory classification, and linear programming.
7. Revisit forecasts regularly
It is important to revisit your forecasts on a regular basis to make sure they are still accurate. Keeping up with inventory can be difficult but it is extremely important if you want to avoid overstocking or running out of items altogether.
8. Take advantage of market trends
Using market trends to forecast inventory is a great way to stay ahead of the competition. Keep track of what is selling, what colors are popular, and what styles are in demand.
9. Prepare for seasonal changes
Preparing for seasonal changes is an important part of forecasting inventory. Make sure you have an idea of what items will be in demand for the upcoming season and what you will need to order to meet that demand.
10. Factor in changes in customer demand
Factoring in changes in customer demand is essential when forecasting inventory. If you notice a change in what customers are wanting, it is important to adjust your inventory levels to accommodate that change.
11. Make sure you have accurate lead times
Having accurate lead times is important because it allows for the proper planning of inventory. Having an idea of how long it will be before you receive your items can help you plan accordingly and avoid running out of stock mid-season.
12. Use safety stock levels to account for unpredictable factors
Using safety stock levels to account for unpredictable factors is important. If you know that there are certain items that are difficult to forecast, it is helpful to have a buffer in case of unexpected changes.
13. Stay organized
Staying organized is key when forecasting inventory. Make sure you have a system in place that allows you to keep track of your inventory at all times. Having an organized system will make it easier to track items that are low or high and adjust if necessary.
Summary:
In this article, 13 inventory forecasting tips have been shared by professionals in the field. The first tip is to make sure your full counts are accurate. In order to track inventory costs, trends, and performance over time you should track it through software or a spreadsheet. Forecasting tools will help you predict future trends and market demand while also taking into account changes in customer preferences.
Prepare your inventory for fluctuations in seasons by forecasting future demands and adjusting your supply levels accordingly based on past data, market trends, and lead times. The article has also outlined the importance of staying organized with a system that allows you to track items regularly so you can adjust if necessary. By taking these 13 inventory forecasting tips into account, business owners can successfully manage their stock and avoid future inventory shortages.