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The-Little-2013-Holiday-Demand-Forecasting-Mistake-that-Cost-ThousandsWith the holidays right around the corner, demand forecasting is the name of the game in the retail sector. Making up 20% of gross sales across the industry and as much as 30% total, ensuring that your business is in position to reap as much business from the holidays is important. But to do so takes more than just filling the stockroom with overstock, ensuring that you are efficiently taking advantage of stock requires an intimate knowledge of the community demographics on top of examining past sales data, something no spreadsheet or home brew system can offer.

Ensuring Your Systems are Working Efficiently

The big problem with most demand forecasting solutions, regardless of the season, is that they only look at historical data. While this can definitely give insight into roughly how business should be doing, and might help with scheduling and human resources, it’s no where near accurate enough to rely on for accurately predicting demand in the future.

By taking a look at a combination of different elements, demand forecasting software helps you improve efficiency by ordering based on what will sell, instead of ordering what may sell, leaving the remainder to sit in the stockroom. Inventory not on the sales floor isn’t working to increase profits, and is doing you and the company a disservice.

Why Historical Data is Inaccurate

Let’s take a moment to examine why historical data is inaccurate, making it a poor source to base purchase orders on.

In the 2013 holiday season, electronics stores were scrambling to keep-up with the demand for the Xbox One, the latest console gaming system. Many were selling rain checks for the system due to limited initial stock. Games for the system were selling extremely quickly, forcing the numbers up due to the newness of the gaming system, and the fact that the customers often wanted to be able to walk out with an item, rather than empty handed.

Examining that data leading-up to this holiday season would show that stores should stock heavily on games for the Xbox One, and in the system itself. However, while they will certainly sell their fair share, basing figures entirely on last years sales would mean most stores would wind-up with a significant overstock at the end of the season.

Don’t Fall Victim to History

While big differences such as the Xbox One situation we just talked about would likely be caught, it demonstrates the fallibility that historical data presents. Customers don’t base their purchases on last year. Times change, needs change, and demands change. Ensure that you’re there to predict those changes. Contact us to learn how our demand forecasting solutions can be implemented in your store quickly and at a fraction of the price of other solutions.

 

the-big-reason-your-demand-forecasting-replenishment-software-creates-fear-and-surpriseOne of my rights of passage as a kid during this time of year was a trip to a Haunted House. To this day I love a good haunted house.  It provides the opportunity to forecast what will pop up where and when. What room has the chainsaw, when will the plastic skeleton pop up, and how awful are the sound FX and music as I wander into the spooky dark places. Funny how quickly I can connect with the scary things that happen to companies using old (legacy) Demand Forecasting & Replenishment software that had core development more than 5 years ago. With a consultant brought in who cannot even explain the differences between demand and sales forecasting; you have a really scary (expensive) house of horror. A current event highlights new markets are being created in days and your legacy software was never designed to meet the scenarios we are faced with in our supply chain all the time now. The Ken Bone costume that was born from a presidential debate in a matter of hours. While your demand forecasting has no way to predict this event, how many of you have custom alerts in your system that you can use to highlight specific events and business rules? Read More

four-ideas-that-can-fix-inventory-replenishmentCan you find new ideas to improve your inventory replenishment and / or supply chain in under three minutes?  Do you find training materials and great ideas shared on the web by your software and other supply chain companies? Does your software support site provide a full offering of concepts and ideas that utilize support documents, template checklists, white board animation, and slide shares to support their product and your business? Read More

2-Secrets-to-Manage-Slow-Demand-Products-that-Make-You-Money

Slow Demand products makeup 35-40% of most retailer assortments and cannot be simply eliminated. In order to profitably sail the Slow Demand Product seas, you need to be equipped with a proper forecasting engine. By providing a forecasting engine that utilizes the correct algorithm for slow demand products, you have taken an important step in your destination to increase demand forecasting accuracy.
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Forecasting-for-Slow-and-Intermittent-Products-the-Fiction

Is Your Demand Forecasting Solution Actually Leading to Profits?

All retailers face the fact that demand forecasting products that move slowly and products that move intermittently during the year is required to grow profits. In fact 35-40% of most retailer assortments consist of slow and intermittent products, while this may be well known, it is less known that demand forecast and how the supply chain software uses the demand forecast are the keys to making your turn goals and maximizing your GMROI. Read More

new_seasonal_index_lessons_from_history

Is Your Demand Forecasting Solution Actually Leading to Profits?

A seasonal index, or seasonal multiplier, is a figure that is used to adjust a demand forecast, either raising it or lowering it for a period of time. The result of the calculation (product base forecast x seasonal index) can be used to determine the inventory needed to support sales during that period of time. A holiday like Memorial Day, a season like spring, or an event like the Super Bowl is often better serviced by applying a seasonal index across the year.
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inventory-replenishment-is-your-big-data-creating-a-big-mess“Big Data” is a buzzword that means just what it says. With the boom of handheld devices, online shopping, and the Internet of Things, retailers now have access to nearly infinite amounts of data regarding their customers shopping habits. All that data requires the right resources to collect, sort, analyze, slice and dice to make the data usable. Companies invest heavily in Big Data resources in an effort to get ahead of their competition. But once you have all that data and you have reports on all that data, what do you do with it? How do you integrate Big Data into your inventory replenishment and your demand forecasting?
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the-internet-of-things-is-bound-to-make-an-impact-in-your-demand-forecastingThere’s a lot of buzz surrounding the Internet of Things (IoT). With Nest Labs’ line of household connected devices and Amazon’s new Dash Button for reordering groceries, customers are getting used to more and more connectedness in their day-to-day lives. Retailers too are trying out ways to be not only more connected to customers but also to connect disparate parts of their business operations by adding connectivity to everyday things. RFID chips in packaging can track inventory from source to customer and provide all kinds of valuable data, as well as lower shrinkage. Digital signage and shelf tags saves labor and reduces pricing errors. With all the new and exciting things that the Internet of Things can bring to retail, it’s shocking how behind the times most inventory planning and replenishment software is.
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Why Some Demand Plans Burst into Wildfires in Your Location Channels

Sometimes in retail, we feel like all we are doing is putting out fires. Little things pop up every day that are urgent but maybe not all that important. This store is out of that, this vendor short shipped something else, and your boss’s boss wants to know why sales were down in this class. We get bogged down in this week’s problems so much so that we forget to prevent next month’s or next season’s fires. Your time should be spent on seasonal planning, demand forecasting, vendor collaboration, and other proactive activities. When do you take off your fireman’s hat and let the small fire burn for the greater good?
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what-your-monday-reports-are-not-telling-you-about-your-sales-and-inventory

Put Down the Sales Reports

Mondays are generally known in retail as “report day.” Sales and in-stock reports aplenty, sorted and summed by every conceivable angle land on every desk from the CEO on down. The point of all these reports is to find exceptions and actionable items. But sometimes it’s like looking for a needle in a haystack. You don’t need a bigger haystack; you need a magnet!
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