skip to Main Content

Make the Transition to Inventory Forecasting Software

Inventory Optimization & Management
03/11/2019

Maintaining the right amount of inventory is key to keeping up with the ebb and flow of customer orders. But what level is the “right” level? If a company doesn’t have enough product on hand, it may miss too many deliveries and lose customers. If it overstocks a product, it will incur increased carrying costs and its cash flow will suffer.

Fortunately, there is a solution to this inventory control conundrum. Businesses that want to be strategic and competitive in their market can use software to optimize their inventory. With ready access to inventory forecasting and optimization software, organizations can avoid the issues and costs associated with stockouts as well as excess and obsolete (E&O) inventory.

Basics of Inventory Forecasting

To run an effective business, organizations must develop an inventory planning strategy. That way, they can balance their supply with the rising and falling demand levels of their customers. Without proper inventory planning capabilities, all it takes is one unforeseen spike in sales to put an operation at risk for a stockout that may compromise customer relationships or worse, impact current and future revenue.

Inventory forecasting is the practice of creating a strategic inventory reordering plan. Supply chain professionals strive to maintain optimal amounts of inventory — neither overstocked nor understocked and to reach those optimal levels, organizations can use a variety of sources to help them develop their inventory replenishment schedule, such as:

  • Trends in demand and sales forecasts
  • Past sales history data
  • Lead times from suppliers

 

Gathering and analyzing all the needed data is time-consuming—and often impossible—to accomplish if relying solely on manual spreadsheets. Inventory forecasting software offers a faster, more accurate alternative.

Where Inventory Forecasting Software Comes In

Inventory forecasting software enables the dynamic analysis of large volumes of data which can lead to more accurate forecasts and therefore improved operations and production.

If organizations are still using manual, unreliable inventory forecasting tools, such as spreadsheets, they may fall behind in completing orders. Spreadsheets fall short in several areas: Spreadsheets are prone to error, labor-intensive, lack in analytics capabilities, and are challenging to consolidate. These unfortunate qualities can cause a number of problems in the inventory planning process.

Overstocking inventory can be just as detrimental to a business’ financial bottom line as understocking. Although the business may not miss out on any customer orders, overstocking creates waste, particularly in the case of perishable items, such as food and beverages, or items dependent on trends, such as fashion or electronics.

With an effective inventory forecasting tool, organizations can analyze historical data and make adjustments on an as-needed basis. As a result, they are less likely to experience the pitfalls associated with overstocking and understocking inventory. Before implementing these technologies, businesses should understand the benefits that inventory forecasting software offers.

Inventory Forecasting Software Features

Forecasting and planning software provides planners with invaluable features right at their fingertips, which they can implement to streamline their inventory planning process. Not only do these tools allow planners to save time, they also empower supply chain professionals to use past data and predictions to optimize inventory levels.

Inventory forecasting and optimization software enables planners to better meet their desired service levels—the percentage of products delivered on time and in full. Maintaining a 100 percent service level is actually a bad idea, as the only way to deliver products on time and in full 100 percent of the time would be to carry a large surplus of inventory. Therefore, many planners use forecasting software solutions to maintain service levels of 90 percent or higher to reach a sustainable service level while simultaneously hitting financial goals.

Inventory software enables planners to conduct accurate replenishment planning, which can involve ordering, making, or transferring between facilities. They can plan inventory replenishment in daily or weekly buckets and automatically push orders to their ERP system for execution. These systems are also sophisticated enough to consider lead times, safety stock levels, and appropriate order sizes. Inventory optimization software ensures that the operations team has the right items when and where they need them.

Automating inventory forecasting saves time by eliminating the need to manually comb through spreadsheets. Automation also reduces the chance of human error, increasing productivity at all stages of the planning process. So, rather than relying on questionable spreadsheet numbers and gut intuition, turn to inventory planning software, such as DemandCaster, for the sound, data-driven assessments needed to ensure your inventory is “just right”.

 

Related Articles

5 Tips to Hacking Distribution Requirement Planning in the Food and Beverage Industry

The Food Waste Reduction Roadmap Report of 2019 show that a third of food, which includes beverages, is wasted around the world. Further analysis of the ongoing waste across the food and beverage production chain in the United Kingdom highlights [...]

A Comprehensive Guide to Predictive Inventory Planning and Management

Inventory management remains an important operational feature that determines the successes and failures of enterprises especially in the manufacturing and retail industries. For inventory management, the challenges for most enterprises are similar at a basic level. The mom and pop [...]

5 Steps to Digitize Your Inventory Planning Process

Many companies cite “inventory optimization” as a goal.  And with the digital tools available today, companies can manage their inventories better than ever with cutting edge inventory planning software such as that provided by DemandCaster.  These platforms empower companies to [...]

Top 5 Production Capacity Planning Challenges You Should Know

Modern manufacturing is a complex endeavor for any company.  Equipment capability, labor and productivity must be balanced against demand, sales forecasts, supply chain issues and many other factors to produce the right volume at the right time. Too much and [...]

Advanced Planning Challenges in Brownfield Facilities

The manufacturing industry relies on its legacy systems and equipment to get work done. This has been the way for decades. A report on the state of the manufacturing industry states that only 26% of manufacturing plants believe implementing new [...]

6 Questions that will Improve Your Capacity Planning Strategy

Capacity planning has always been a core strategic process in the manufacturing industries' quest to meet the demand of customers in a timely and efficient manner. Having accurate insight into your plant’s production capacity within specific durations of time while [...]

Are you effectively managing your inventory?

Inventory management is essential in today's industries.  Poor inventory management can lead to a lot of problems such as too much inventory, disorganization, or low product turnover. Avoiding these issues can save your business time and money.  CGN said, "Fast paced [...]

What every beginner warehouse owner should know

There are a few strategies and techniques that every new warehouse owner should be aware of. On the top of that list is inventory management! After all, inventory is the reason we have warehouses.  While it might seem like common [...]

Should you be using inventory optimization software?

Should you be using inventory optimization software? Which types of businesses would benefit from it? The answer is probably and most of them. Tech Target said, “Companies implement and use inventory optimization software because they realize that inventory, although necessary, [...]

Calculating Safety Stock: Simpler Might Not be Better

What is safety stock? Safety stock is the extra stock you maintain to mitigate the risk of running out of raw materials or finished goods due to uncertainties in supply or demand. The purpose of safety stock is to ensure [...]
Subscribe to our Blog
Back To Top