If your company has concerns about:
- Forecast accuracy
- Inventory levels
- Customer service levels
you definitely need an inventory forecasting and planning tool in order to solve your pain points. Advanced inventory forecasting tools are the solution for improving the forecasting accuracy and saving unnecessary costs.
Better forecasting and planning allows companies to cut inventory costs and avoid manual estimates that are error prone and impractical with large inventories.
Ok, but what is inventory forecasting?
First of all, it is a science, not an art, and doing it the right way will impact your company’s success. It’s a fact that by using the right approaches and tools companies can achieve better results in terms of quality of service, inventory optimization, and operational costs.
A common scenario: companies usually invest a lot of money in inventory, but often the service level they obtain is really poor. This means not providing customers the right amount of products/services within a given time period.
As a consequence, it leads to a high probability of stockouts and lost sales.
The solution usually relates to the inventory balancing: removing the inventory where they have too much and replenishing products that need a purchase order. And the best is yet to come: it often results in cutting the total inventory costs while raising the service levels.
Magic? No, this is optimization.
Sometimes companies solve their service levels issues with huge investments in inventory: if I store big quantities of each product, I will never go understock.
Right? Yes, of course. But what about the locked capital represented by excess inventory? How many investments in productivity, processes, personnel, new markets are we missing because of that locked capital?
Inventory forecasting techniques based on data science can make companies save from 10% to 20% only on inventory costs, even for companies that operate with a pure make-to-order approach.
A good forecasting is necessary for the optimization phase and for every planning activity. Being unaware of the advantages in using data science for the inventory management will make your work very difficult; on the contrary, mastering the forecasting and planning techniques based on data science will make your work easier and your return on investment will definitely make you happy.