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What do you do if your inventory forecasting and demand planning is constantly inaccurate?

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Inventory forecasting and demand planning are essential skills for inventory management, as they help you balance supply and demand, optimize inventory levels, and avoid stockouts or overstocks. However, what do you do if your forecasts and plans are constantly inaccurate, leading to poor customer service, wasted resources, and lost sales? In this article, we will explore some possible causes and solutions for this common challenge.

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Rana Shabbir Haider rana

Director Operations At Birdie New Jersy USA based (since-1943) Richard A Leslie

1 Assess your data quality

In order to improve your inventory forecasting and demand planning, you should first assess the quality of your data. Data quality is based on accuracy, completeness, consistency, and timeliness. Poor data quality can be caused by human errors, system glitches, outdated sources, or irrelevant factors. To evaluate your data quality, you should audit your data sources and processes regularly to identify any gaps, errors, or inconsistencies. Validate the data against external benchmarks or industry standards to ensure it reflects the current market conditions and customer behavior. Cleanse the data by removing duplicates, outliers, or irrelevant records and correcting any mistakes or anomalies. Additionally, enrich the data by adding more relevant and reliable sources such as customer feedback, social media, or competitive intelligence.

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Muhammad Shahid Latif Butt

CEO BUTT TRADERS ( Retail & Wholesale ) Deals in : Steel, Cement, Bricks, Crush, Sand/Mud, FloorChips, Marbel,Tile bond
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It's true , those who updates their system time to time, they will not face any queries. I believe, you didn't need to believe on system unless you didn't update this with physical data, When I was manager, I have been adopted a practice like when I closed my day, I write down the closing balance of atocks & amount, and next of opening, this should be same, otherwise something error inn, For that condition immediately contact to IT department for this queries and solve timely that avoid to difference in stock & values, most of times managers facing a huge shortages due to this type of error but they don't understand of difference, also adopt a physically inventory according to system and do a compile and update, that's why this is so good

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2 Choose the right forecasting methods

The second step to improve your inventory forecasting and demand planning is to choose the right forecasting methods. These techniques or models are used to project future demand based on historical data and other factors, such as trend analysis, moving average, exponential smoothing, regression, or machine learning. However, not all methods are suitable for every situation due to their different assumptions, strengths, and limitations. To select the best method for your business objectives, you should understand the characteristics and patterns of your demand, evaluate the advantages and disadvantages of different methods, test and compare their performance on your data using metrics such as mean absolute error or mean absolute percentage error, and then adjust the method as needed.

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Rana Shabbir Haider rana

Director Operations At Birdie New Jersy USA based (since-1943) Richard A Leslie
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The calculation of inventory for demand and supply, I find very attractive. So guide us in this from your side. Which automatically tells us through the system what is the demand and what is the supply and also helps us in business that how much our final burden is increasing and how much it is decreasing.

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Muhammad Shahid Latif Butt

CEO BUTT TRADERS ( Retail & Wholesale ) Deals in : Steel, Cement, Bricks, Crush, Sand/Mud, FloorChips, Marbel,Tile bond
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For the right forecast method, you need to check your data of system, which base you're making forecast, the right figures can assured you for your right forecast, Demands & planning are the basic methods of your business strategic, your last year's data vs this year's prediction, just evaluate on the base of historical data, Accurate date will given you smooth direction in business lead.

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3 Monitor and update your forecasts and plans

The third step to improve your inventory forecasting and demand planning is to monitor and update your forecasts and plans. This involves regularly reviewing them and making changes based on new information, feedback, or events. Doing so will help you stay on top of performance, detect any deviations or errors, and respond to customer needs and market conditions. To monitor and update your forecasts and plans, you should establish a clear and consistent reporting and review process with relevant stakeholders and experts. Additionally, collect and analyze data on actual demand, inventory levels, customer satisfaction, and sales performance. Compare actual results with forecasts and plans to identify any gaps, trends, or anomalies. Then adjust forecasts and plans accordingly before communicating them to your team and partners.

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Muhammad Shahid Latif Butt

CEO BUTT TRADERS ( Retail & Wholesale ) Deals in : Steel, Cement, Bricks, Crush, Sand/Mud, FloorChips, Marbel,Tile bond
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Most of times we followed the historical data but the real factor we have been faced in previous trend, like last year were corona diseas or weather forecast changes, so this year, you will made something different as per L/Y trend, you are following the current response on your customers feedback, just random checkslist your communication gaps that made sense for upcoming events protocol

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4 Implement inventory control measures

To improve your inventory forecasting and demand planning, the fourth step is to implement inventory control measures. These are the actions or policies you take to manage your inventory levels, costs, and quality. They help you optimize your inventory turnover, reduce your inventory holding and ordering costs, as well as maintain service levels and customer satisfaction. Examples of inventory control measures include setting inventory targets and reorder points based on forecasts, plans, and desired service levels; applying ABC analysis to prioritize resources; using inventory optimization tools or software; and conducting inventory audits and counts. All of these measures will ensure accuracy and identify any discrepancies or issues.

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5 Learn from your mistakes and successes

The fifth step to improve your inventory forecasting and demand planning is to learn from your mistakes and successes. This means analyzing performance and outcomes, identifying strengths and weaknesses, and applying insights and feedback to future actions. Learning from mistakes and successes can enhance skills, knowledge, and confidence, as well as foster a culture of continuous improvement and innovation. To do so, you should solicit feedback from customers, team members, managers, and partners. Additionally, conduct root cause analysis and problem-solving techniques to understand errors or failures and prevent them from recurring. Celebrate achievements and successes while sharing best practices with others. Finally, seek new opportunities to expand horizons and test abilities.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What do you do if your inventory forecasting and demand planning is constantly inaccurate?

1

2

3

4

5

6

1 Assess your data quality

2 Choose the right forecasting methods

3 Monitor and update your forecasts and plans

4 Implement inventory control measures

5 Learn from your mistakes and successes

6 Here’s what else to consider

Inventory Management

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What do you do if your inventory forecasting and demand planning is constantly inaccurate?

1

2

3

4

5

6

1 Assess your data quality

2 Choose the right forecasting methods

3 Monitor and update your forecasts and plans

4 Implement inventory control measures

5 Learn from your mistakes and successes

6 Here’s what else to consider

Inventory Management

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