Inventory Management & Demand Forecasting

It is extremely rare that any company will be able to work with zero inventories. Therefore a well thought out and reasoned inventory policy that is constantly reviewed and updated will be a requirement to achieve the level of service required by customers. Achieving that inventory level is as much an art form as a science.

As cash and working capital become ever more critical getting this investment in materials right is critical today more than ever. Wasting cash by holding excess inventory, being unaware of your customer’s true needs, being late or supplying the wrong goods is suicidal for business. In many cases delivering less than 99% on time in full will result in your product being replaced by someone else product.

We live in a world of instant gratification where customers expect to get instant information on who has stock, how much and when they can get it delivered. Investing in improving the forecasting and inventory management process, integrating the business planning processes to the forecast and building capacity (internal or outsourced) to deliver what and when the customer wants will pay dividends.

A reasoned and reasonable forecast will drive down inventories of raw materials and finished goods and provide excellent return on investment for improving your process.

The rules of forecasting;

  1. A forecast is necessary for planning supply and supporting financial and business plans
  2. A forecast is never going to be right (unless it is lucky)
  3. A forecast is wrong because the assumptions were wrong
  4. Accountability for the forecast rests with Sales and Marketing
  5. Forecasting needs an application of intelligence
  6. More accurate forecasting comes from your customers’ customer
  7. Forecasts at an aggregate level are more accurate than the detail

At ISPM we can audit your existing processes, support the development of new process and if necessary carry out basic system forecasts to develop the forecasting processes at your business.