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Keep reading to learn more about why inventory demand forecasting is so important.
Demand forecasting has been around for a long time, but with the newest technologies
demand forecastings are more accurate than ever.
One of the implementations of demand forecasting is in inventory management. Inventory
demand forecasting is the process of predicting customer demand for an inventory item over
a defined period of time. It is an essential task for any business, big or small. Accurate
demand forecasting gives powerful insights on how much, when and which products should
be stocked in inventory.
Here are some major advantages of inventory demand forecasting.
1) Increased customer satisfaction
Providing customer satisfaction is the goal of every company. In order to keep your
customers satisfied you need to provide them with the high-quality goods or services that
meet their needs. Providing them with the product that they want in a timely will increase
their satisfaction. They will buy confidently from you, knowing you have the inventory that
meets their needs.
2) Reducing inventory stock-outs
Another way in which can reduce stock levels and avoid stock outs is through using accurate
demand forecasting. Demand forecasting helps to time purchases to correspond to when
sales need to be fulfilled. The less time inventory spends in the warehouse, the less money
you’re paying to let it just sit there waiting to be sold.
3) Preparing the budget
Demand forecasting plays a significant role in making budget. It helps reduce risks an
make efficient financial decisions . All strategic and operational plans are formulated around
forecasting demand.
Conclusion
In summary, inventory demand forecasting allows to make better decisions about which prices to adjust and when, which products to promote, and what promotional tactics to deploy, in order to achieve objectives. The benefits are significantly more profound and productive than a simple sales forecast. By combining forecast you can make better buying, allocation, and replenishment decisions. In turn, you will reduce the cost of over-stocks and minimize the frequency of out-of-stocks.
