FORECAST

 It is the process of forecasting future sales and inventory demands for a future period based on the historical sales data, purchase orders, demand planning, scheduling, distribution and production. It is one of the data analytics methods through which companies make data-centric decisions by predicting future demands. Through this, you can estimate inventory at an item, product level, location and category-location level – for finished goods, raw material and work-in-progress goods.  This data can be of help for multiple departments in the retail business – these detailed data points can help retailers reckon the store footfall, the customer support can approximate the number of calls they expect and delivery people will evaluate the number of orders. In simple words, it identifies all the key demand drivers to improve the profit margins, sales and transactions. The new age inventory management software uses algorithms to transform complex information into meaningful data. Inventory forecasting is all about computing an average for the demand as well as the supply to make predictions on the future sales of any given product. It is an objective-specific method of forecasting current sales and revenue based on the well-designed financial plan. To achieve this, your business must have a solid understanding of its present and past sales performance, its future sales growth forecasts, and its competitors' sales projections. Your company must also have a clear idea of its market size and market competition as well. Primarily, there are two major types of forecasting techniques available -quantitative and qualitative.For business owners, a good forecast is one that helps them make better decisions. For instance, if a business is growing very fast, it needs to be able to anticipate a high-demand product or a product that will appeal to potential customers and therefore grow in a large volume. For small businesses, forecasting is essential especially if they're operating with limited financial resources. These types of forecasts are called qualitative and can usually be done with the help of business analysis software.Quantitative forecasting involves analysing data such as sales, inventory, and customer demographics. The main purpose of this is to determine the demand side of your business, as well as the supply side, such as production. The latter is done to determine how much product you have in stock and how much production you need to fulfil orders. Using this data, a computer program generates a mathematical formula that predicts the demand and the production needed to meet current and future orders. When the forecast is generated, it is compared to the actual data and adjustments to be made are then made depending on the results.Qualitative forecasting is done without the use of data, instead, the use of qualitative tools or observations. Several factors can influence the forecast, such as product demand and price level, demand about the competition, customer satisfaction, supply and quality, and competition. These factors are considered by a team of analysts that make the forecast more accurate by gathering the data that are gathered together and synthesizing the data to come up with a statistical forecast. To sum it upInventory forecasting reduces stockouts and holding cost of inventory along with inventory waste. Along with qualitative and quantitative forecasting, it also assists in graphical and trend forecasting.