As we get further along in the year, consumer behavior will change as do the seasons. Each season tends to create a variety of demands across different sectors as it relates to what consumers are seeking with the new weather. On top of the changing seasons, we are also still dealing with the effects of COVID-19. More people are going to want to experience the outdoors as the weather heads towards summer heat, yet there are still concerns about the effects created from the pandemic.
Given the two significant factors that may affect the supply chain, forecasting software is necessary for any business and warehouse that wants to continue operations and have a positive profit going into the next quarter.
Forecasting software can allow an enterprise to plan logistics, finances, and workload for future business activities. This software draws on previous data and results to draw possibilities of future results. The paths that are created can be analyzed by management, and the best or optimal route can be chosen.
Here’s a look at the more detailed aspects and benefits of forecasting software.
One of the main benefits of forecasting software is its ability to prevent needless spending or investment. Through gauging proper supply levels, warehouses can avoid spending excessive amounts on inventory that may not meet the same level of demand. This will also save on costs when less space is taken up by inventory that is not moving anywhere. With more space free, the warehouse can use it for other inventory that may have different demand thresholds.
Forecasting software allows warehouses to create inventory levels that provide the right amount of inventory at the right time. In order for this to happen, the software uses different types of forecasting.
Qualitative and Quantitative Forecasting
Qualitative and quantitative forecasting are two different methods in which forecasting software can help warehouses keep proper inventory levels.
Qualitative forecasting occurs when there is a lack of raw data. This can be the case when a business is new and may not have months or years of historical data from which to draw upon. It may also be useful as a forecasting tool when significant challenges impact the supply chain; a perfect example is the effect of COVID-19.
In order to perform qualitative forecasting, data collection is done to discover consumer opinion and sentiment. This forecasting draws upon focus groups, consumer surveys, and market research. The collection of qualitative data allows forecasting software to develop possible demand forecasts based on consumer opinion.
Quantitative forecasting is the opposite of qualitative forecasting. This technique involves drawing on raw data and numbers to perform inventory forecasting. This approach can be more accurate and precise than qualitative forecasting. However, the challenge it faces is that it cannot incorporate present data from significant events such as COVID-19. Quantitative data will draw on historical numbers to discover trend lines over time that impact with different time periods.
For example, quantitative data in an established warehouse can determine that X number of sleds are sold at the beginning of the winter season. The software can make a note that throughout however many years the warehouse has been operational, they have never shipped above a certain amount of sleds. The management team can use this quantitative data to determine how many sleds they will have in their inventory for the upcoming winter seasons.
Combined, qualitative and quantitative forecasting can provide substantial insights into the future financial and inventory planning for any warehouse.
Forecasting software allows warehouses to reduce the amount of manual labor necessary for continuing operations. Determining inventory levels related to supply and demand can become more automated with forecasting software. Increased automation reduces the chance of human error, which is always a possibility when labor is performed manually.
As a result of reducing the likelihood of error, the management of the supply and production cycle will be more efficient.
Additionally, with more manual labor being refocused in different areas where automation is not available, work productivity will increase. This will ultimately lead to a more efficient enterprise with fewer errors and increased productivity.
Inventory forecasting can improve customer satisfaction because it increases the efficiency and productivity of the warehouse. Customers are less likely to encounter “out of stock” messages when browsing for goods.
Additionally, good forecasting software can improve response speed and shipping times. Due to the process being more automated and precise, less time will be spent trying to identify which goods are going to be shipped. Instead, the supply will already be present in the warehouse and ready to be shipped.
Forecasting software that draws data from trends and qualitative analysis can also identify the types of goods that may fit into new and exciting trends. If a warehouse can utilize that data to get the newest items that are most appealing, more customers will use that warehouse to get those goods before they are sold out.
Overall, forecasting software will create improved customer satisfaction because it ultimately improves performance and productivity of the warehouse itself.
Regardless of your business size, it is always important to consider growth potential. Of course, managers will want to meet deadlines and thresholds for the immediate future; however, long-term growth should also be considered. With effective forecasting software, warehouses can gain strategic insights into how they will wisely use their resources. It will also create more accurate data reports involving productivity and efficiency in the warehouse. Managers can use this data to plot out their growth path and to avoid or mitigate any challenges they may face.
At eoStar, we have developed a variety of software options to improve warehouse logistics and performance. We have decades of experience and are willing to work with you to develop a customized forecasting software experience. Additionally, our team is on standby to provide continual support after our software is integrated into your logistics systems. Contact us today for a consultation.