[Previously, we brought you part one of the list of “Ten Signs Your E-commerce Business Needs an Inventory Forecasting Solution.” Here is the remainder of that list. Let’s revisit our discussion with Craig Barnell, General Manager of Fishers Finery and learn how they have been successful with our inventory demand forecasting solution.]
These are some of the challenges we faced as an e-commerce business before employing an inventory forecasting software solution, and how that solution remedied those problems.
We are grateful to ForecastRx, because their solution allowed us to free up both time and money, so we could focus on growing our business instead of constantly scrambling to manage our inventory and ordering. If you identify with any of the following situations, an inventory forecasting solution may be in your business’s best interest.
6. Slow turning products make up a large chunk of your inventory
Building off point number four from the previous list, your business is losing out on sales of quick-turning, revenue generating SKUs, because you don’t have access to funds that are tied up in illiquid inventory. Imagine having bundles of cash sitting on your warehouse shelves that you can’t utilize. That’s basically what slow-turning inventory is. Better forecasting will enable you to invest less in these SKUs and more in ones that drive the majority of your business.
7. It’s hard to keep your top selling child SKUs in stock
Sellers on Amazon are likely familiar with product parent-child relationships and their importance to sales and visibility. One of our products has four children with one child that makes up 75% of sales for the parent grouping. It would be devastating for sales of the entire parent group if that SKU were to go out of stock. That product would lose page rank, causing us to lose out on valuable revenue for the entire group of child SKUs, and recovery would be difficult, if not, impossible. A good inventory forecasting and management solution will allow you to set variable service levels on different items, so you will remain in stock on your key SKUs in a parent group, but keep less capital in the less valuable children in that group.
8. Your products have long and varying lead times
It can be especially hard to predict order points and necessary order quantities when your products take a variety of lengths of time to arrive into your warehouses or FBA locations. Some sources you buy from may be across town while others are across the globe. A proper inventory forecasting software package like ForecastRx allows you to set lead times per item or per vendor, so you no longer need to manually account for them in your inventory forecasting. This saves time and reduces the chance of human error that can be detrimental to your business.
9. You order your items from numerous manufacturers
The obvious corollary to #8: Since we buy from manufacturers located both domestically and overseas. Because of this, we have lead times for items that start at 25 days and in some cases, extend up to 100 days. If accurately forecasting demand months into the future wasn’t hard enough, keeping track of lead times, which could even vary on a PER SKU basis from the same vendor, was. This is where a robust purchase order forecasting solution really helped us. In preparing for peak selling seasons, there is little room for error, and if you err, the results can be catastrophic for your business. Not ordering a top selling item in time for the holidays can decimate your company’s revenue in a vital sales period.
10. Your products require a bill of materials
This isn’t an issue that affects all sellers, but does affect sellers who manufacture some or all of their own products. Our manufacturing process involves buying raw materials, which are shipped to a factory where they are made into our items, which are then shipped to us to be sold. We ran into a problem early on in our operation. We wouldn’t accurately account for lead times or purchase quantities of certain intermediate goods required to make our products, so our manufacturing would be delayed, and we would be stuck waiting for our final items for long periods of time, causing us to miss out on sales. With proper intermediate good forecasting afforded to us by ForecastRx, we no longer have this problem. We order the required materials to produce our projected item demand, and never forget small pieces that can stall an entire operation.
Do you need an inventory forecasting solution that will work for your business!
ForecastRx can help you with your demand forecasting. Want to learn more, get a demo today!
