What are Some Best Practices for Inventory Forecasting
Let’s start with a story. Say Sabrina has a boutique. She is relatively new to this business. Therefore, for promotional purposes, she offered a huge discount on her products on the eve of New Year. The good news was she got a huge response.
But sadly after 2 days, she hit a roadblock. She was out of stock. So she couldn’t fulfill her orders. That tarnished her reputation and she got bad reviews even her product quality was great. So, how did this happen? Two words- inventory forecasting.
The impact is not always as huge as Sabrina’s. But for the lack of practices for inventory forecasting, many businesses be it offline or online is suffering slowly but eventually. Poor prediction can have an impact on your business, which will slowly decrease your customer satisfaction and ruin your profit loss margin.
What You Need to Know about Inventory Forecasting
It is a scientific approach of predicting sales during a specified future period based on the proposed marketing plan and a set of uncontrollable and competitive forces
It may sound difficult but it’s really straight forward. You need a calculation to predict how much product you will sell over a specific period of time. These estimates take historic sales data, planned promotions, and external forces into account to be as accurate as possible.
However, if you try to do your forecasting manually then it is certain that you will struggle at some point. Because it will take a lot of time to track the whereabouts of your stocks.
That is why you need to know what rules and practices to follow. Cause, that has helped the successful companies over the years to maintain their reputation and customer satisfaction over the years.
That is where an automation tool can come in handy. It will take a lot of work out of your hand and put you on ease. But let us see some of the best practices for this method shall we.
Best Practices For Inventory Forecasting
As we have said earlier,
The right rules and practices can be a good incentive for the accurate projection of your inventory.
If you follow these fundamental rules then there is no stopping you from gaining control over your inventory.
Work in a Team
Don’t do this work alone. If you take the help of a team then your work will become easier. You will be able to manage your inventory with more accuracy and efficiency. The key stakeholders from operations, finance, marketing, product development and more should be involved. To work in a team you need to practice team-building exercises.
Exploit Your Data
To reorder your inventory, you first need to understand the past data of your inventory. Because data is very important for any business small or medium. Having said that, your past sales and inventory data should guide your future decisions and help you be proactive. Then, your inventory forecasting process can be repeatable and use a consistent forecast period.
Future planning is very important. It will help you to determine what amount of products you need for your stock. Also, you can note down the holidays and the special days where the business will be heavier than usual. Sometimes the business will slow down or ramp up. You can easily predict your inventory management from the previous year’s notes.
Overview of Real-Time Data
You need real-time data to accurately predict future demand. These real-time data can help you with your inventory forecasting. Real-time data lets you monitor actual stocks at any point in time and helps you keep tabs on whether your estimates were precise or drastically off.
If they were not satisfactory, examine the root cause. Understanding why this happened will help you learn from the past and adjust your forecast as you go.
Choose The Right Software
When you are running a business there are a lot of things going on your mind. Lack of proper management can lead to chaos. And in the midst of those chaos solving the inventory problems can look nothing less than a puzzle.
Therefore, make sure the system you are using has all the features that can take on your business size, complexity. And a tool like WordPress ERP Inventory System is perfect for small to medium-size businesses. It can easily fit right into any kind of business offline or online.
How WP ERP Inventory Extension Can Increase the Chance of Accurate Forecasting
WordPress ERP optimizes your small to medium businesses with powerful HR Manager, CRM & Accounting tools .
WP ERP has 20+ extensions. One of them is the Inventory Management extension. It has all the features to increase your chance of accurate forecasting. Accurate forecasting is important because it makes sure that you will not out of stock or get overflowed with products.
Because if there are more products than needed then there is a chance of the products getting expired or decayed. That is why an Inventory Management system is so necessary. What better system than WordPress Enterprise Solution (WP ERP) Inventory Management System. Because it has features like,
You Can See an Overview of All The Products
When we talked about the best practices for inventory forecasting, we talked about how real-time data can help. Well, the WP ERP Inventory extension gives you that exact opportunity.
You will be able to see a complete overview of all the stocked products that you have along with the item code, buying/selling price, no. of stocks left, and more.
Find Your Products Easily
WordPress ERP inventory system has a flexible search option so that you can search for products whenever and wherever you like. So, if you have a big variety of products you can easily find your desired products. Therefore it becomes easy to know what products are there in your stock.
Generates Detailed Report
Reports are always important if you want to keep yourself updated. Reports give you the complete idea and overview of the state of your stocks. So, it becomes quite easy to predict what products to order and not to order for your inventory.
You can easily use the sales report generated with WP ERP to predict the nature of your sales.
Avoid Repetitive Tasks
You have the built-in option to import your products to your inventory using the CSV file. How cool is that? This will save a lot of time and you will be relieved of the hassle of doing the same task over and over again.
See, how unique and exclusive features WP ERP Inventory extension provides so that you can get your forecasting as accurate as possible.
These are reasons why when it comes to small to medium businesses you can not ignore WordPress ERP.
Benefits of Right Inventory Forecasting
As of now, we hope you have understood how important the prediction of inventory is. But if you still have doubts then let us list you some points so that you can fully understand why you need forecasting.
Sales On Point with Inventory Forecasting
If you are forecasting is on the point then your sales report will be on point too. You can easily fulfill each order with the utmost ease. There will be no scenario of backorders.
Customers won’t have to come to your page and see an out-of-stock message every time they try to buy a product. This will boost the customer satisfaction rate, so as to your sales.
Less Manual Labor
If you have the correct forecasting then you will be better prepared for the changing demand. Also, it will save you the extra cost of the Warehouse. And it will save you the extra labor you had to take on. A tool like WP ERP inventory help automate reordering, predict labor needs, and account for changes in order volume, making it easy to understand what’s coming and reduce inventory carrying costs.
Inventory forecasting helps you manage your products through the production cycle. If you have the right idea about your Warehouse timelines and the exact stock levels then it will become easy for you to order products and maintain the balance of your products.
Less Harm Done To The Products
If you have products more than you need at a time then it will only cause harm to the products. They can get expired, or lose demand. Data-driven predictions will stop you from purchasing products you don’t need at that time. It will help your inventory accounting.
Final Word on Inventory Forecasting
Inventory Forecasting is very important for any kind of business. No matter what you do at the end of the day it’s still not full proof. There is no shortcut to the accurate forecasting of your inventory. Yes, the tools will ease the process.
But you have to be smart and efficient to make it work. You need to choose the right tools and have the correct planning for your future demands. That way you don’t have to face the scenario as Sabrina’s. When it comes to the right tool, we have discussed why should you choose WP ERP.