You can make a big difference in your company’s bottom line in 2020 with an inventory forecasting system to help you do that.
A forecasting system provides proven benefits for businesses: optimized cash flow, satisfied customers, minimized inventory costs, informed financial planning, increased ability to negotiate with vendors, and the ability to strategize sales plans. In fact, almost every department of the company benefits from an inventory forecasting system. Yet, many businesses do not have one.
Here is a more in-depth look at the benefits an inventory forecasting system provides:
Fulfilling customer demands on-time in a cost-effective manner – A forecasting system that responds to current trends will enable its users to avoid surprises and have proper levels of inventory on hand to fulfill customer orders without carrying excess stock. Manufacturing lead times are factored in to ensure that inventory purchases are made far enough in advance.
Lowers Liabilities and Markdowns – With a forecasting system, businesses are alerted early to items that are not meeting their sales projections. Production can be canceled, pricing can be adjusted to increase demand, or marketing promotions can be employed. Taking action early ensures that the most possible profit can be generated.
Increases Turn and Cash Flow – Inventory needs are mapped out with a forecasting process. Businesses are able to save money because they can project the inventory they will need and when they will need it, thus not having to hold excess inventory. This provides better cash flow, enabling businesses to buy more of the items that are delivering results.
Provides Insights for New Product Development and Planning – Forecasts enable businesses to see changes in consumer demands and help answer why the marketplace is changing. With well-defined data, a business can determine the whitespace in a market and begin development of products to fill that space. Using historical data that is in the forecasting system, a business can forecast potential for new products and increase their success rates.
Increases Knowledge of Market – Because a well-defined hierarchy brings clarity and well-planned forecasts provide a roadmap, companies can see changes to the marketplace quickly. Valuable insights can be gained, giving companies a competitive edge.
Provides a Roadmap for Financial Planning – Forecasts define the expected sales, inventory levels and profitability of a business. When trends deviate from the roadmap, actions can be taken to get back on track to achieving company goals. Strategic decisions can be made based on what is working and not working. Forecasts help businesses anticipate change, reduce uncertainty and identify the best ways to achieve their goals.
Guides Scheduling the Rest of the Company – Forecasts enable businesses to anticipate staffing and production needs. Production schedules can be adjusted based on shifting priorities. Staff can be scheduled according to forecasted needs in the warehouse and distribution centers. Productivity and efficiency increase with information from the forecasting system, such as placing forecasted top sellers near the shipping stations.