As your business grows and you continue to move product, keeping track of inventory trends and knowing how much to order becomes too complex to manage well. You could just purchase a whole load of inventory, but that ties up cash on the shelves and overfills your warehouse.
How can you anticipate how much you’ll sell and optimize your stock levels accordingly? Our inventory forecasting module helps meet customer demand while keeping stock levels minimal for better cash flow. It can help you know what to invest in, fulfill orders consistently, and evaluate trends of products.
The EBMS Inventory forecasting module gives sales projections and calculations for your inventory mins and maximums based on your sales history. You set the parameters based on how you want it to run – like setting sales level classifications or excluding anomaly months from the history – and as you continue using it, the projections become more and more accurate.
You can also use it to help identify your most popular inventory items and optimize how you keep these items stocked. Managing your top 5% of inventory may help you improve inventory turnover by 50% or more.
If your inventory is tight, it frees up resources for investment in other areas of your business. You’re not tying up as much cash in product sitting on the shelves, so you have more flexibility with your budget. Your warehouse space can be cleaner (or even smaller), making organization and day-to-day work easier for your warehouse and purchasing team. You won’t sacrifice the ability to fulfill customer orders quickly because you’re able to anticipate them before they happen.
Any small business handling large amounts of inventory would benefit from inventory forecasting, but especially if you’re handling seasonal items or those that increase or decrease in a linear way, it's crucial. It takes the guesswork out of knowing how much to order.
Landscape supply companies or outdoor equipment dealers understand this concept well - your busiest months are in the spring and summer and your purchasing manager needs to have orders placed before the end of winter to meet the springtime demand. Without inventory forecasting, figuring out how certain products have been trending over the past few seasons is really complex to figure out. You’ll likely end up with too many sandstone pavers and not enough clay brick ones. The orders you place in season to try and make up for the miscalculation will likely not arrive in time for your customer’s projects.
With inventory forecasting you can see mins, maximums, and sales projections for the upcoming year. Your Purchasing Managers can place orders with confidence and minimize overstock or shortages to give you tighter inventory control.
Takeaway: Inventory forecasting is a great way to improve cash flow, anticipate and meet customer demand, keep team members productive and happy, and get a better understanding of inventory turnover in your company. Talk to your Account Manager to learn more.