6 Key Factors to Look for While Choosing the Best Inventory Forecasting Software for Your Business
Are you working in an eCommerce industry or a sector that needs to deal with inventory now and later? If yes, you might be aware of the challenges faced while managing inventory. Don’t worry! Technology has enabled us to predict the inventory you need on hand in order to meet market needs. Inventory forecasting software is used for this purpose. By forecasting product sales for a particular time and location, you can plan your operations accordingly to fulfill consumer demand.
Inventory management software is a vital tool mainly for retail industries. Sometimes, retailers produce more or fewer products than the actual demand. This can cause a huge revenue loss to businesses. To overcome inventory challenges, take a deep dive into what inventory forecasting is and how it can help to manage your product sales.
What is inventory forecasting?
Inventory forecasting is the process of determining how many products will be required to fulfill consumer demand for the upcoming months or years. Using accurate forecasts, you can make informed decisions, plan your production, and implement marketing strategies. These estimates are made using historical sales data, current and future trends, planned promotions, and seasonality.
Inventory forecasting software is developed using forecasting algorithms and AI to deliver the most accurate results. It considers all the external factors mentioned above and allows you to make adjustments in the data according to the current and future situations. You can depend on inventory planning software rather than on guesswork to plan your sales.
Factors to consider for inventory forecasting
• Historical sales – over the past3-5 years
• Sales velocity – the sales rate if inventory was full
• Sales patterns – identifies if requirements are stable or increasing every year
• Seasonality – tracks fluctuations of sales during a specific time of the year
Challenges in Inventory management
Deadstock includes items that are never sold or are lying in the warehouse for a long period of time. It is not likely these products will sell. Warehousing costs of deadstock also increases and causes huge financial loss if the products don’t sell.
To avoid deadstock, businesses can plan inventory using inventory planning software. Using inventory forecasting software, you can predict how much stock is needed and make decisions to produce the right quantity of goods to avoid deadstock.
2. Inventory shrinkage
Inventory shrinkage occurs when there is an insufficient supply of stock to fulfill consumer demand. This condition usually arises due to unpredictable circumstances such as expired products, theft/robbery, or damaged products.
Inventory shrinkage is a major problem in the supply chain management process. To avoid such losses, safety stocks and safety time are calculated while planning demand. Inventory management software enables businesses to overcome inventory shrinkage issues.
3. Out-of-stock inventory
The sales of some products aren’t consistent throughout the year. Sometimes the demand is high during festivals, and other times it is low. How can you track those sales patterns? Use sales forecasting software and track the sales based on historical data. You will get an estimate of how much to produce for a particular season in the upcoming year.
Using this technique, you are well-prepared to face the upcoming demand without your products going out of stock. This prevents revenue loss, whereas you can also build marketing strategies to increase your seasonal sales.
Important Features of Inventory Forecasting Software
1. Access to a greater number of users
A good inventory management system offers access to a greater number of users. When purchasing inventory forecasting software, think of how many employees would need to handle this software. Members from the finance, accounting, and sales department will require the inventory planning software more than other teams. A cloud-based system can be accessed by anyone, regardless of time and location.
Tracking your sales can be a slow process if you do it manually. Choose inventory management software that uses tools to help automate data whenever you go to new places or open up new warehouses. Retailers and eCommerce industries can get more benefits from good inventory planning software than the other industries. Inventory management software should be scalable in order to meet the needs of increasing sales. Make sure that you don’t have to reconfigure inventory management software every timey our organization expands.
3. Real-time metrics
Updating inventory at regular time intervals for regularly scheduled deliveries can be time-consuming. Choose areal-time inventory forecasting software that tracks all the purchases, orders, and associated finances. You can minimize errors by choosing a system that involves real-time metrics to keep records.
4. Improved warehousing
Your inventory management software should track inventory from the time it is received to the time it is delivered. Eliminating manual processes avoids errors in inventory records. In an inventory management process, the inventory management software tracks everything, from the product leaving the factory to the product reaching the warehouse. If you lose the inventory data, you may face huge financial loss. Therefore, you can lower the risks of losing inventory data by using inventory management software.
Inventory management software should offer personalized value to your organization. Choose software that can adapt to different types of interfaces and hardware used in your company. A goodinventory management system should include features that are necessary for your business. Features should have the ability to be enabled or disabled depending on current needs.
6. Accurate forecasting
This is the major feature of inventory forecasting software. If the sales aren’t predicted accurately, you will have to face overstock or stock-out situations. If the forecasts are inaccurate, it will result in loss of revenue, customers, and profits. Therefore, it is important to use accurate sales forecasting software.
If you’re in the eCommerce industry or any other organization that needs to manage inventory, choose the modern technology tools for forecasting and make your tasks much more manageable. Inventory forecasting software will optimize your supply chain process to reach your customers at the right time and place. If you’re looking for the best forecasting solution contact the Avercast team today!