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.

Reviewing several retail software provider web sites, a visitor will see that many software companies highlight their ability to forecast slow or intermittent demand products and measure success by the accuracy of the forecast. However, forecast accuracy alone is not the solution to the slow and intermittent demand problem. In light of this forecast accuracy means profit ‘myth’, let us look at a few of the ‘real’ myths surrounding slow and intermittent product demand forecasting.

  1. Myth #1 You should review forecast accuracy within a single company traditional demand period.
  2. Myth #2 You should focus on in-stock and not service level.
  3. Myth #3 You should use the Time Series, Exponential Smoothing, and This Year/Last Year forecast methods.

Overstock and Expired Inventory are the Result

Following these 3 ‘myths’ you run the risk of there being overstock in your inventory and also of running into shelf-life issues due to the wrong forecasting method being used for slow and intermittent demand products. Also it is important to have a demand forecasting solution that can identify slow and intermittent demand products. Bottom line: without a strategy for managing slow and intermittent products you will suffer the pains of overstock and lost sales.

The Key to Managing Slow and Intermittent Product Demand

By focusing on a combination of service and demand forecast accuracy across a wide selection of periods you can avoid the common pitfalls of many retailers. Identify the slow and intermittent demand products in your assortment and try some of our ideas for 45 days and learn how this can “Tighten the Links in Your Chain”.

The Data Profits Solution

We are here and ready to help. Contact us for a free consultation about your forecast accuracy and inventory management opportunities, or request a free demo and see how you can greatly improve your retail business in just 90 days.

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