Keeping up with the day-to-day tasks of inventory management can feel like an endless struggle. For new business owners, it can be difficult to keep track of the levels of your current stock and estimating how much stock to order in the future. Using forecasting models, you will not be guessing anything. You will be able to know exactly when to order more inventory and how much you will need to order.
There are many methods and models you can follow for great forecasting. Learning about all of them is necessary. Check out these articles on naive forecasting and all the forecasting techniques. This article is all about Demand Forecasting.
There are many outside influences that will cause your inventory to fluctuate from your desired levels. Things like new product releases might change your customer’s demand. Your customers might want your new products rather than the old product that you still sell.
This type of forecasting tries to take all the outside variables and creates a more nuanced and accurate inventory assessment and prediction. Demand forecasting uses a lot of different methods to get a better picture of the market and such. These can be broken down into quantitative and qualitative techniques.
Quantitative techniques will take the past data and combine it with formulas that determine the products future performance. The calculations do include the outside influences like holidays, product launches, and other demands. These formulas tend to look at a lot of the past data to provide more accurate insights.
Qualitative techniques take a more subjective viewpoint. They do often provide sharper insights. This technique focuses more on he educated guesses that are made based on knowledge of how the market works and experience.
Inventory management is a process that is never ending. You have so many factors that affect the overall outcome of this process. Knowing and understanding the multiple techniques for forecasting that is available to you, will help you have the tools you need for effective management of your inventory without any stretches of time with overstock or understocked products.