With popular trends, offers, promotions, seasonal peaks, long supplier lead times and general growth to consider, ensuring there is enough stock to meet demand is a key concern for many businesses on a daily basis. When it comes to forecasting, each company will have their own method best suited to how they operate and the stock they sell, with no right or wrong way of gathering estimates for how much stock is required. Some businesses will simply have set quantities for items, others will look back over historical data to work out average usage over certain periods and reorder stock based on those calculations.
However for businesses that will only sell from stock or have items that have experienced supply issues or problems with existing stock holdings, calculating accurate stock level requirements for future demand can become difficult due to figures being skewed by periods of no stock or usage. There are a number of reasons these periods can occur:
- It may be that a new product line is held in stock for a period prior to being offered for sale or that initial sales for the item take time to gather momentum.
- A business only selling from stock could end up running out and therefore record no sales for the item until new stock arrives
- A supplier may discontinue an item or go into administration meaning items may be out of stock until an alternative supplier is sourced.
- Overseas shipment may be delayed due to a number of factors or a manufacturer may have production issues leading to stock shortages while awaiting delivery.
- A shipment of stock may need to go into quarantine for a period, a product recall may be issued from suppliers or a problem occur affecting the saleability of existing stock such as water damage.
The issue with all of these scenarios is that when stock level requirements are forecast based on historic usage then these situations can all lead to periods where no sales are made, however this lack of sales is not a lack of demand as had stock been available, then sales would have been made. When these periods are then included in calculations to determine future stock level requirements, a figure not sufficient enough to meet demand is generated, leading to lost sales and potentially lost customers.
Functionality already available within OrderWise provides users with flexible control over the forecasting methods for each item in each stock location that is used to calculate minimum and maximum stock holding levels. Options include Set quantity and Fixed usage (both of which are manually determined) or Constant usage and Variable usage. These latter two options are configured to look back over a user defined period and determine stock levels based on this time scale, with the ability to also take into account supplier lead times and much more.
Now In version 10.1 of OrderWise, new enhancements have been made to this functionality to enable more accurate forecasting calculations when the Constant or Variable usage methods are in place. When configuring the forecasting method, users now have the option to ignore periods of No Usage, No Stock or No Usage & No Stock in the calculation. By utilising these options, businesses can ensure the scenarios above do not impact future forecasted stock level requirements.
By being able to ignore usage periods at the stock location level of the item, this will provide companies with exceptional flexibility and the functionality to match their forecasting with the exact requirements of their business. By improving the accuracy in which this can be calculated, businesses will have greater control over stock levels, ensuring sales are maximised, customer demands are met, purchasing activities are streamlined and best value is obtained from suppliers.
For more information on OrderWise including Stock Control, download our brochures or watch our videos.
To discuss your requirements in more detail contact us on 01522 704083.