Inventory forecasting, also known as demand planning, is a data analysis method used by purchasing managers and decision makers to predict inventory needs, anticipate demand fluctuations, uncover savings opportunities, enhance marketing strategy, and ensure customer satisfaction.
Inventory Forecasting & Everyday Data
Every single day the world collectively produces approximately 2.5 quintillion – 2,500,000,000,000,000 – bytes of data. A single day’s worth of global data would fill 10 million Blu-ray discs. These discs would measure, if stacked, to the height of 4 attached Eiffel Towers.
Data is being produced, gathered, analyzed, interpreted, and used in decision-making – big and small – every day of our lives.
For example, it’s probably safe to assume you own a mobile phone, and that the mobile phone is considered “smart.” Why do I feel comfortable making that assumption? Because of data.
According to Pew Research, an estimated 5 billion people own mobile phones, and over half of those 5 billion are considered “smart.” In the U.S., only 13% of phone users do not use a smart phone, and just 6% of the U.S. adult population have no mobile phone at all.
Now that we’ve established the likelihood of your smart phone ownership, think of all the ways you use that phone – or at least the data it provides you – to make daily decisions. Do you use a navigation app to seek faster routes to work or to locate a new restaurant a few blocks away?
75% of American smart phone owners regularly use navigation apps. Are you counting your steps, your calories, or your water intake with a health tracking app so you can make more informed choices when it comes to diet, exercise, and well-being? Around 69% of American smart phone users regularly do.
Data is everywhere, operating on individual and collective levels, influencing our preferences, our choices, our conversations, our policies – but it is not as Orwellian as it sounds. Instead, the power of data through technology has enabled us to better understand the world around us, the people in it, and how things operate.
So, why not let data empower your small business? More data, more knowledge, more power – especially for the risk averse. Inventory forecasting is a powerful process for satisfying customers, gaining a solid market foothold, bolstering growth, and fortifying against economic downturns and unforeseen disruptions.
What is Inventory Forecasting?
Inventory forecasting, commonly referred to as demand planning, is a method for predicting inventory needs, preventing out-of-stocks and overstocks, and optimizing cash flow. The forecast itself is based on historical analysis, seasonal fluctuations, and factors like promotional events. Inventory and business data must be collected typically for at least six months to ensure forecasting accuracy. The longer a business collects data, the more accurate and sound predictions will be. Without any data, an inventory forecast becomes a guess and most guesses are incorrect.
The hardest part of forecasting is simply letting the data build – in an instant gratification kind of world, this can be frustrating, but the slow build is a much more effective, fulfilling method than operating without informative data at all.
How Does Inventory Forecasting Work?
Forecasting requires a collection of data, a goal, and several mathematical formulas. Fortunately, most businesses preforming inventory forecasts have a solution in place to collect, compute, and predict your needs for you, without any potential human errors getting in the way. Sure, it is not impossible to do all of this by hand – but how reliable the forecast will be is difficult to know.
Allowing data to define inventory, purchasing, sales, and decision-making is a powerful way to fortify your business for growth, consistently meet demand, balance inventory levels, and satisfy customers.
Inventory Forecasting with Acctivate
Acctivate Inventory Software is more than a single tool for forecasting inventory. Acctivate is a robust solution for small and mid-sized, single or multi-channel distributors and retailers seeking advanced inventory and business capabilities while using QuickBooks for financials. Acctivate offers dynamic inventory forecasting tools, allowing your business to focus on day-to-day tasks while silently gathering data in the background to use in forecasting, analysis, and decision making.
Acctivate allows inventory-driven distributors and online retailers to strengthen inventory control, improve warehouse management, create visibility across supply chains, enhance order management and fulfillment operations, promote better informed decision-making, reduce overhead and cut costs, and provide businesses with a path for growth and success.
How Acctivate Customers Use Inventory Forecasting
For nearly two decades, Acctivate has allowed small and mid-sized businesses across a wide berth of industries to gather, interpret, and utilize inventory data to improve workflow and purchasing processes, decision making, and customer satisfaction.
DataRay, Inc., a photonics technology company based in Redding, CA, uses Acctivate’s forecasting to predict the amount of inventory needed to build assemblies being ordered.
DSX Access Systems, a security software and system manufacturer based in Dallas, TX, uses Acctivate’s forecasting to adjust purchasing needs and to prevent over-stocked raw inventory materials.
Rainbow Book Company, a library book distributor based in Crete, IL, uses Acctivate’s forecasting to gain a bird’s eye view of business operations, as well as to review and predict sales, internal payroll, and commissions.
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