Before we get underway, it feels important to clarify that no member of our team considers themselves to be a fortune teller! What we can do and what we believe to be important however, is the ability to forecast demand. Set sales objectives, confidently fulfil demand, and accelerate growth through data driven insights and never again believe that your inventory was standing in the way of your success.
How does inventory forecasting work?
Forecasting is generated based on historical sales data and real-time trends (inflation, environmental disasters, political conflict, hype). We look for patterns within these data groups so we can estimate how much product we might sell at a particular time of year and why.
Having this awareness will allow you to make better informed decisions concerning your inventory and overall health and growth of your business. Some forecasting perks include:
- Increasing sales
- Reducing inventory costs
- Minimising waste
- Improving operational processes
- Financially plan more accurately
- Developing a more loyal community
Number crunching may take you far but not all the way. There is a lot to business which can’t be extracted from pure data. Qualitative assumptions, usually coming from industry experts, should aid you in developing your long term strategy. Keep your ears open to what these leading voices have to say!
Some considerations to make when you are working on your forecasting:
- External variables such as seasonality, competitors, geography, economy, going viral
- Internal variables such as types of products, pricing changes and promotions, new product offerings
Once you have taken the time to understand forecasting and its benefits, make sure to work through these steps for the most accurate findings:
- Define the future forecast period
- Set hypothesis
- Select the right forecasting method
- Build your base model
- Check for errors
- Test simulations
- Build your inventory plan
- Track real time data against scenarios
- Re-forecast regularly
We get that this all seems daunting at first, hence why at Prediko we make prediction as easy as a couple of clicks. With us, you can build forecasts as complex or simple as you wish, edit them live, compare to the machine-driven algorithm or simple rolling-mean. All held in an easy “Plan” page. Take a look at what your forecasts with Prediko could look like