The Benefits of Inventory Forecasting
The profitability, reputation, and customer satisfaction levels of your company may slowly and subtly decline as a result of poor inventory forecasting. Due to this, accurate inventory forecasting is a skill that every business owner and supply chain manager must master.. In this guide, we discuss the benefits of inventory forecasting.
What is inventory forecasting?
Inventory forecasting is the practice of estimating how much merchandise you will sell over a given period of time, in order to determine the amount of inventory you will need to fill future customer requests. To be as precise as possible, our projections take into account past sales information, upcoming promotions, and outside factors such as seasonality.
The benefits of inventory forecasting
- Inventory can be kept in large quantities in a warehouse and left to gather dust, but that’s typically not a lucrative business strategy. You would not be required to purchase unnecessary inventory during a specific time period if you have data-driven projections of how much inventory you will need. This implies that you can enhance inventory accounting, and free up cash flow for other business operations.
- Stockouts and backorders can be greatly reduced if you have sufficient inventory on hand at the required time. This optimizes the flow of your supply chain departments enabling you to pick, pack and ship each order as soon as it is placed and give your customers the delivery timeframes they were promised. Proper inventory forecasting allows the marketing team greater insight when planning campaigns, whether it be for wholesale, retail, or even at a distributor level. Additionally, when customers can locate what they’re looking for online, without running into an “out of stock” warning, they experience a great shopping experience. which persuades them not to leave your e-commerce site to buy elsewhere. You run the danger of losing a customer’s future business each time they leave your platform or business and engage with a competitor.
- Efficient inventory forecasting will also assist in streamlining your warehouse operations and reducing warehousing expenditure. Inventory forecasting systems make it simple to anticipate the future and lower inventory carrying costs by automating replenishment, projecting warehouse labor requirements, and accounting for cash flow and revenue variations due to shifts in order volume.