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Inventory demand forecasting is the process of predicting demand for an inventory item over a defined period of time. Usually this involves reviewing historical data e.g past consumption or sales data and using knowledge of market fluctuations and trends to forecast the future values. A combination of known and forecasted...Read more
In supply chain management it’s important to be able to measure the accuracy of your demand forecasts. Inaccurate demand forecasting can lead to the accumulation of excess stock or, the reverse – issues with product availability. Both are unwelcome problems for inventory planners! Ensuring forecasting accuracy should be a key...Read more
When finished goods are built from a set of components, a Bill of Materials (BOM) is extremely useful for inventory management purposes. A bill of materials is most often associated with production planning in manufacturing, being used in manufacturing software, such as materials resource planning systems (MRPs). BOMs are also very...Read more
Whether you’re a manufacturer, wholesaler or retailer, forecasting future sales or customer orders is the logical starting point of all business planning activity, including inventory purchasing. It’s therefore important to choose the right forecasting models to aid management decision-making. If you can accurately forecast future demand, you can optimise your...Read more
One way to check the quality of your demand forecast is to calculate its forecast accuracy, also called forecast error. Forecast accuracy is the deviation of the actual demand from the forecasted demand. If you can calculate the level of error in your previous demand forecasts, you can factor this...Read more
As globalisation encourages supplier networks to extend across the world, the likelihood of supply chain disruption increases. Supply chain disruption is when events, sometimes planned, sometimes unpredictable, affect the supply of inventory. Often, if not dealt with effectively, it can make it challenging to fullfil orders on time and, as...Read more