When considering starting a new business or enhancing your current small or medium-sized business, inventory forecasting is crucial. Why would such a seemingly small thing as predicting what inventory level you will need to maintain in the future make such a big difference in your long-term business success? Because it helps you make the most of your resources in the here and now while avoiding lost sales that only become apparent a long way down the road.
We will get into the details of you can avoid leaving your business to chance by focusing on inventory forecasting.
Every time you purchase or sell inventory, you need a way to document incoming and outgoing purchase order. Sure, you can take a wild guess as to what inventory items you will move in a given week or month, but why leave such an important part of your business to chance? By using inventory forecasting software, you are able to better predict your inventory needs, track your supply chain, and improve future demand forecast accuracy. A repetitive order, which could also be considered a standing order, means a customer will be purchasing the same inventory at the same interval for a long period of time. This makes reordering much easier and less demanding because it is predictable and makes demand planning much more streamlined.
AUTOMATIC REORDER POINT
When reordering different products, you can't always do inventory forecast the same way. For example, let’s say you own a small business that sells winter equipment. One thing you must consider is the different times of year in which you are more or less likely to sell your goods to interested buyers. Once you have pinned that down, you can gauge how well you performed in the past years using your inventory management software. To do both demand forecasting and inventory forecasting properly, you need to compare your sales history in a variety of timeframes, short and long. The reorder point is looking at sales in previous Novembers, for example, and then calculating where you could be this November and ordering based on those sales data.
Inventory management software will assist you in forecasting the optimal inventory level. Why not give yourself an edge over your competitors? Take advantage of all of the inventory forecasting features available to you and you will discover some amazing results. Use hard data to build your company and stay above the mediocrity of other companies. There is no need to remain part of the pack when you can rise above it all with a little help. Be proactive and be prepared by using Fishbowl Manufacturing or Fishbowl Warehouse!
Fishbowl offers a Forecast plugin that adds an entire module to the software focused exclusively on inventory forecasting. You can use it to study previous sales trends over any given period of time and then use that historical sales data or inventory turnover to discover seasonal customer demand trends and other useful tidbits of data that will help you plan for future inventory demand requirements. You will be able to look ahead at prospective inventory costs and other factors that can have a big influence on your purchasing decisions.
Inventory forecasting involves looking at historical sales to spot seasonal sales trends and other fluctuations. This helps companies revise their inventory quantities to make the best use of their resources. They can look for repetitive orders and use automatic reorder points to help them make inventory forecasts.