Forcasting Success For Your Company

Having as few out of stocks as possible should be the goal of every retailer. Out of stocks, put simply, is a measure of the goods that you should have but do not have. It can be explained better this way. If a customer comes into your store and you have high out of stocks, then nine times out of ten, they will not find what they need and will leave. If this is a recurring problem, they probably won’t return to shop and will tell everyone why. Thus, you business is hurt exponentially by this.

Many retailers are reducing out of stocks through increasingly sophisticated forecasting systems. There are some great companies out there that specialize in forecasting software. Logility and JDA are examples of two of the leading companies. More and more companies are recognizing that demand is not a homogenous thing. There are different demands for different items. They are also improving my collaborating with vendors.

Let’s take a look at what makes a good forecast.

Data is the key. As a general rule of thumb, the more sales data you have on a product, the better your forecasts. The goal is not to have zero errors but to minimize them. Another important piece of information is knowing the current quantities of merchandise in each store. As I just stated, point of sale data is clearly the single most important piece of data in the forecasting process. Other significant types are listed below.

1. Characteristics of items being sold, including class, size, color, etc. 2. Locations of stores and the sales patterns of each location. 3. Demographic information about your customers 4. Promotional information. Is it being promoted? 5. Weather or other seasonal information. 6. Shipping of each vendor

Another very important part of the forecasting process is the people that you employee. Why?

They are responsible for ensuring that the data that goes into the system is accurate. For example, if you are selling vases of several different colors. The red is selling exceptionally well, but one associate keeps keying in the upc for the blue vase. You will soon have a serious problem, because it will look like the blue is selling when the red is really selling. If you order back into the blue, then wham! You are now sitting on tons of slow moving inventory.

Also, the associates can interact with customers to find out why a particular item is selling and why another is not. This information could prove valuable when planning for next season.

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