In the past, demand forecasting has been fairly straightforward. Warehouse managers would use one of two demand forecasting methods: quantitative, which is the use of historical sales data, time series analysis, and case studies from the field to predict future customer demand, or qualitative, which is the use of expert opinion and market research. While both of these forecasting techniques worked fine then, times have changed.
What is demand forecasting?
Demand forecasting is the process of analyzing historical data as well as current economic factors in order to estimate the future product demand of customers and the associated materials necessary to fulfill those demands.
Now it’s more difficult than ever to rely on them for proper demand forecasting. Why? Because the uncertain times we live in affect demand, and that makes short-term demand forecasting, as well as long-term demand forecasting, much more difficult. After all, things like COVID-19, the war in Ukraine, rising gas prices and interest rates, and the sanctions on Russia are all happening in real-time and they affect customer experience and demand.
That’s why so many warehouse managers are turning to route accounting systems to help with inventory management.
What Are Route Accounting Systems?
Route accounting systems are comprehensive systems that allow warehouse managers to track direct store distribution orders from inception to completion. Older models only tracked orders in the warehouse, on trucks, and at delivery, but today’s superior systems track orders from the onset through the financial reconciliation. In other words, with route accounting software systems, you can track orders at these points:
- Order entry
- Order processing
- Order building
- Truck loading
Using route accounting systems allows warehouse managers to execute capacity planning and long-term forecasts based on forecasting models created with real data.
How Route Accounting Systems Help With Demand Forecasting
Now that you understand how demand forecasting is evolving and why warehouse managers have to turn to different types of forecasting models such as route accounting systems, let’s take a look at some of the ways these systems can perfect your sales forecasts and make you better able to serve your customers’ present and future needs.
Stay Ahead of Supply Chain Issues
The supply chain is a mess. And even though your customers understand the state of the supply chain, they still expect you to do all you can to relieve them of any shipment delays or disruptions. That’s a tall order if you are still relying on old-school methods of demand forecasting.
But if you’ve made the move to a route accounting system, it’s in the bag. You now have the ability to better plan for customer demand and make the adjustments you need to avoid supply chain issues. Because your demand planning is so advanced, you can order ahead so that once the orders arrive, you will have anticipated them and can fill them immediately.
Just imagine: No more supply chain issues and your customers will marvel at your ability to fill their orders when other distributors are still making excuses.
Inventory Made Easy
The inventory that you carry in your warehouse makes up a huge part of your budget, and if you get it wrong, it can negatively affect your business. If you spend too much on inventory, you may not have the budget you need to properly staff your warehouse so you can get the orders out on time. And if you don’t spend enough, your business will suffer because you won’t have enough product to satisfy customer orders. But when you use a route accounting software system, your inventory will become much more precise.
Part of demand planning is knowing how much inventory to stock so you will always be ready to ship as soon as the orders arrive. By making use of route accounting systems, your inventory will always be “just right” and that will translate into better budgeting – and customer service.
Get the Pricing Right
Another repercussion of the supply chain issues the world is facing is the scarcity of products. And we all know that when products are scarce and customer demand is up, prices tend to go up. That’s another reason why route accounting software can help you stabilize and better manage your warehouse systems.
By better understanding the demand, you will be able to price your products accurately because they will be based on the predicted demand. And if you have ordered a product in advance and have a good amount in inventory, once that product becomes scarce, you can adjust your prices up. Not only will you improve your bottom line, but your customers will be happy that you can supply the sought-after product.
Plan Promotions and Discounts
Speaking of pricing, when you use an accurate route accounting system and know in advance when customer demand will be down, you can plan for discounts and promotions during that time to move more products. For example, if February has historically been your slowest month and your system is telling you that this February will be just as slow, you can announce a promotion at the beginning of the month and continue it until your sales are predicted to pick back up. That will allow you to move product during the predicted slow time which will reduce your inventory burden while keeping the cash flowing.
No More Surprise Expenses
As the warehouse manager of a distributor, you understand that when your customers need product, they want it now. And if your demand forecasting is off, you could be caught short. But business is competitive, and that means if you don’t have the product, you are likely to pay expedited shipping or rush fees to get it. Additionally, if want to make the customer happy, you may have to pay for expedited shipping to get the product to them in time.
All of this can be avoided with route accounting software. Because the software can predict the amount of inventory you will need, you will avoid frustrated customers – and the fees that come from having to appease them.
Now You Can Set Those Goals
It can be difficult to set goals when you don’t have all of the information you need to plan. That’s just another reason why route accounting software can help you better manage your warehouse. By getting accurate, reliable information, you will have the tools you need to set goals for the future. For instance, when you know what sales you can rely on for the rest of the year, you will be able to accurately plan for next year’s milestones, budget, and goals.
Identify and Rectify Issues
Your sales pipeline is the lifeblood of your business and when it gets a kink, it can throw your entire system off balance. But when you use route accounting software, you will be able to easily identify and rectify any supply pipeline issues. And that will not only keep your product flowing, but your customers will remain happy because you will have prevented those issues from affecting them.
Let Us Help You Overcome These Turbulent Times
If supply chain issues and other world uncertainties are making your job more difficult, it might be time to think about updating your system and joining those distributors who have decided to take the steps necessary to stay competitive in these crazy times. If that sounds like you, why not reach out to eoStar and let us analyze your current system and make suggestions about how you can improve things?
You need route accounting software that is functional, easy to learn, and seamlessly integrates with your current systems. Contact us now, and we will show you how our route accounting software can take the pressure off and make your job fun again!
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