Why Inventory Forecasting is useful?
Whether you are a retailer or wholesale seller, inventory control is always a matter of concern. Imagine these two scenarios-
- A customer approached you, liked your item and made a confirmed buying decision but you had to cancel the order at your end just because you are running out of stock. Worst of the worst! You are losing your potential customers just because of improper inventory management.
- Also, you have your warehouse full of the products but these are not getting the buying clicks. These products are just laying in your warehouse and stockpiling dust on them and acquiring lots of space in the warehouse.
Here rises the urge of Inventory Forecasting
Inventory Forecasting is the approach in which the sellers are suggested to predict the inventory on the basis of the past events of sales and the current trends of the market. It is the approach to manage inventory at the level where- neither the stock is over piling nor the shortage prevails.
Most of the sellers are amazed at this thought that is it possible to forecast the inventory and manage it in the required amount.
How To forecast?
There are few ways with which you can forecast the inventory for better sales and have control over it.
Here they are:
Quantitative prediction On the basis of previous sales: Tracking the products on the basis of the previous day’s sales is the best approach to predict the demand for the products in the future. If any item is getting more buying clicks in the last 15 or 30 days it means it is quite popular and useful for the customers. You can add it to your inventory warehouse.
Categorise the inventory: Categorisation is a new way to maintain the inventory. Divide your stock on the basis of the speed of products to get out from your warehouse to the customer’s house.
Categorise the products on the basis of stock and shipping:
- Products Moving with Accelerated speed: The products that are getting frequent and back to back orders. Also, you have made it possible to ship these products fastly. With this, you can decide whether to keep your inventory for a long or not.
- Products at normal shipping end: The products that are slower to process because of the farther shipping areas.
- Non-moving assets: Make a section for the products that get buying orders rarely. By categorizing, you can know which products are just occupying space in your warehouse holding the place of popular products. So you can remove them as these are just occupying space and if kept in Amazon’s inventory, you are uselessly paying charges for them.
Know the market trends: Another way to predict the amount of inventory is to know the ongoing trends of the market. It might happen that products that were popular before, would not gain any order now just because the market has a new product better than yours or available in the latest version. Before stockpiling any product in your warehouse, know the demands and need prevailing in the market.
Use Inventory Automated Tools: If you are not making it proper to predict the demands of your inventory and products, you might run with the complexities to fulfill customer’s orders. On one hand, with the insufficient inventory, you may lose your customers or if you could manage to fulfill the orders you might need to pay an extra amount to your suppliers, manufacturers or transporter for the urgent delivery so that you would ship it to your customers. It would be hectic, costly as well as risky to retain the customer’s trust. Thus it is suggested to use the automated inventory management tools that can predict the stock chunks of your inventory. The tools are designed to notify the stock when it undergoes a certain amount automatically. With this, you can know and refill your inventory.
Keep your inventory at the marketplace’s warehouse: Managing the warehouse on your own and processing the bulk orders can be complex and tiresome. If you are selling as a brand or you are popular among your customers and getting more frequent orders then you should use the inventory services of the online marketplaces. For instance, Amazon through its FBA service, processes and fulfills orders on behalf of its sellers. Here Amazon notifies its sellers through their Amazon account about low inventory. It also predicts the number of days you can fulfill orders efficiently on the basis of product sales in the previous days. It asks for restocking too. This is not possible when you manually manage the warehouse.
How Forecast is useful for the sellers?
With the accurate forecasts and predictions, you have a sufficient stock of more popular products in your inventory. Then it will help in
- Amplifying customer’s trust and satisfaction: When customer orders for any product from any seller and he gets it on time without any delay, it builds customer’s trust in the service provider. When the customers get satisfied with the seller’s service, they prioritize that seller for the next purchase.
- Boosting Profit and BuyBox opportunity: Amazon constantly checks the services of the sellers. Every order is being satisfactorily processed at your end. There is no cancellation of order because of out of stock condition. This means you are getting more sales and thus reaping the profit from every purchase. With more sales with no cancellation rate and quicker services, you can qualify to have a buy box on Amazon.
- Lowering inventory cost and space: The products are getting orders and you are busy in fulfilling them. It means the warehouse is getting vacant and you don’t need to pay an extra amount to Amazon just for keeping your inventory in its warehouse for a long time. Also, when a product vacant its space, you get the space for newer products of your store.
- Money Making products only: With the forecast when you know the trending products, you can stock those useful products only into your warehouse. This means only money making products are in your warehouse for which you are
Inventory management and control are not only related to stockpiling the items in the warehouse rather it is the process of managing the inventory for fulfilling the customer’s orders without any hassle. The statistics show that Inventory forecasting helps in a 40% increase in sales. If predictions are accurate it can reduce the inventory cost by 60.3%. Use the correct statistics for calculating the previous sales and predict the future sales to efficiently stock your inventory. Neither in abundance nor in scarcity is the aim of forecasting. Use it wisely and boost your sales.