Make sure you have just the right product inventory. . . not too much or too little
Product Inventory Forecasting is an important part of any business operation. Knowing when and how much to reorder is a key piece of maximizing your profits and minimizing losses. Here is why you should start with inventory forecasting if you haven’t already and some tips for success to manage your inventory.
Less Inventory Needed to Be Kept
Having enough of a product is important to keep business flowing, but having too much of an item on hand can be a problem. An overstock of a product can result in loss of profit from storage space or even the product becoming obsolete over time.
More Sales from Not Going Out of Stock
Not only will you be able to make sure you don’t have too much of a product, you can also help make sure you don’t run out of stock with product inventory forecasting. This will help you keep customers satisfied and coming back to your store, since most people when they see an item is out of stock will just look for another place to get it.
More Efficient Manufacturing Cycle
When you order a product from a manufacturer there is often a hefty lead time associated with the order. Manufacturers need to order raw material from their suppliers, this can take two to three weeks. Then they need to setup their tooling to run and make the order. Then the parts need to be shipped over. The manufacturing process with shipping can end up taking months depending on the complexity of the product.
How to Properly Forecast Your Inventory Needs
Seasonal Forecasting –
Seasonal inventory forecasting involves looking at the data of when you sell the most of an item for a period of the year. For example, a company that sells swimwear might do really well in the summertime but not sell much during the off months. So they would need to look at their past data to draw up an estimate for how much stock they should have for the summer and keep a smaller inventory for use during the colder months.
Seasonal forecasting isn’t limited to just seasons of the year though. Holidays and events such as elections can all be times where you’ll need to manage your stock differently than during the off year.
Trend Inventory Forecasting –
Trend inventory forecasting is a lot like what it sounds. You can look at both internal trends that are happening with the sales of your business and external trends such as what’s happening in the world.
Looking inside your company, you can track who is buying what product and what their demographics are. This is useful information for your sales and marketing teams.
Paying attention to what’s happening in the world and what trends are becoming more popular can help you make useful predictions.
For example: using eco friendly materials has become increasingly important to many people over the last decade. Using more green materials could help you benefit from that trend.
Another example most people felt was during the beginning of COVID-19, toilet paper went out of stock nearly overnight.
The Key is Keeping Good Inventory Records
You’ll want to track what items are being sold and how many are being sold on at least a month to month basis in general. This will give you a good idea in general of when your items are selling more and when you should start restocking to make sure you have enough of a supply for your customers and you have a long enough of a lead time for manufacturing and shipping.
One of the most helpful modern aids for inventory management is the different point of sale(POS) and inventory software available. Use inventory management or point of sale systems to help automate your process and keep accurate inventory tracking. This will allow you to make better forecasts both seasonally and with emerging trends.
If you are looking of any assistance in manufacturing or sourcing your products, contact us or give us a call. We have over 30 years of experience in manufacturing and sourcing customer’s products successfully.