Inventory management can be a difficult task for new and old businesses alike. Do you know how to forecast your inventory so that you are not over or under-stocked?
There is nothing worse than not having enough inventory to fulfill your customer’s orders. If you have an online e-commerce business, it doesn’t matter how beautifully laid out your website is and how well everything flows together, if you don’t have stock on what the customer is there to buy, they will leave your site and go to the next. You don’t want to lose customers, right?
Inventory forecasting is the practice of looking at your previous sales, how the sales are trending, and the demand for your products. You need to make sure that you are placing your orders with enough lead time so that you don’t run out of stock.
In most business contexts, forecasts are needed to support resource allocation decisions. More accurate forecasts lead to better resource allocation and thus improved financial performance, particularly by reducing the amount of inventory that must be carried. There is a direct relationship that exists between forecasting and inventory management. Inventory management may be the most important lever in the supply chain in its overall effect on corporate profitability.
It is crucial to know who your target market is and their shopping tendencies. If this is all new to you, you need to figure out your baseline. Is your item seasonal or year round? What size and colors are the most popular? Do you have enough in stock if the trend decides to jump in the next couple of months?
Do you have “safety-stock”? Safety stock is the little cushion that you have so that if you have a little wiggle room while you are waiting for the next shipment. It is imperative that you have a little bit of safety-stock, so your customers don’t go to the next website or store.
As businesses expand, it gets harder and harder to maintain effective inventory controls. ReachOut Business Solutions provides solutions that help small businesses save money, reduce labor costs, and better manage inventory through a unique partnership with an inventory and warehouse management consultant. Let us help you develop effective methods to maintain enough stock to meet consumer demands without straining your internal resources and budget. Be sure to follow us on Twitter, LinkedIn, and Facebook to keep up to date on all our latest articles.
