Accurate Demand Planning & Forecasting For Superior Inventory Management

Whenever retailers look for assistance with problems related to the inventory management, it is usually associated with increasing the level of out-of-stocks which is responsible for customer service complaints and lost sales or over-stocks. As a result, it ends up in slow inventory turnover & creates dead inventory. In general, over-stocks and out-of-stocks are really the flip sides of the inventory management coin. Any effectual proposal to resolve these problems must solve the important structural causes of the inventory management problems. The superior inventory management starts up with accurate, timely & detailed demand forecasts. The jonathon karelse northfind is regarded as a thought-leader in terms of demand planning & forecasting.

Difference Between Purchase Planning And Demand Planning:

It is vital to differentiate between purchase planning and demand planning. The demand planning is known to be the sales plan through which purchase planning, replenishment parameters, and inventory planning are created. It is quite hard to plan purchasing and inventory activities or create replenishment parameters without in-depth prediction on how much will be sold, what will be sold when it will be sold, who are the ultimate customers and channels through which it is sold. However, all the replenishment parameters will be rolled over, prevailing purchasing patterns continue & the inventory is allowed to move out & flow similar to the auto-pilot. The end result is overstocks and out-of-stocks as demand alters.

Without massively reliable predictions, retailers must plan to hit a delicate balance between too much stock or carrying too little. Seldom, they feel obliged to safeguard themselves against back orders and out-of-stocks by stocking several layers of added inventory in reserve, tying up the precious resources which could be utilized in a productive manner to serve the clients and improve the business. With a background in corporate development and strategic planning, jonathon karelse has the utmost interest in business growth and improvement.

Analyzing Historical Sales Data:

Precise demand planning & forecasting starts up with a detailed analysis of historical sales data. However, it is vital that sales which are made out of special orders, stock, huge closeout sales & any other extensive sales which are prohibited from the historical data. Most of the demand planning & forecasting software packages tend to exclude the sales when the forecasting software seems to be fully-integrated with help of order management software. Furthermore, the prohibited orders are tagged properly & exclusion parameters are loaded well into the system.

It is also vital that lost sales owing to out-of-stocks are considered to factor in so that the sales history reflects majorly on the actual demand instead of just sales. It is essential that the planning procedure drills down to the least possible level so each category, sub-category, SKU or style is reviewed not only for current sales trend or potential opportunities rather it is analyzed for potential negative impacts of emerging technology of increased competition, new product introductions and changes in terms of promotional patterns.

Understand Selling Characteristics:

Usage of monthly historical data instead of weekly data is considered as the reasonable means to ease the planning process. Items which show sales fluctuation from one month to another, there is a need for different forecasting method that shows significant seasonal sales fluctuations.  For seasonal items, the forecasting method begins with previous year sales and for non-seasonal items, sales will be predicted by previous weeks or months.

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