Most small to mid-sized business owners and managers don’t release they have a powerful tool available to them to assist in decision making, inventory purchases and even for marketing programs and campaigns.
This tool is called demand forecasting or sometimes demand estimation. While it is not an exact measurement of what can be expected in future sales and marketing campaigns, it is a very strong indicator of the potential demand. This allows a business to make informed decisions based on market demand, competition, pricing and on what to bring into stock and inventory based on more than just a hunch as to what is selling in the market.
The Software Solution
Today’s demand forecasting software makes this estimation or evaluation of the possible demand in the future more accurate and much easier to complete even for a very small business.
The more information that is available to the program, including information on past sales, current sales, supply on hand, pricing and other data points, the more accurate the forecast will be.
For example, if a business offers seasonal items, the software can track, record, analysis and graph the last X number of years of sales to predict what sales will be for the upcoming season. This provides the business owner with the information needed to boost an order to keep up with increasing sales or the drop the initial order volume as sales fall off.
The Benefits
One of the big benefits for a small business using demand forecasting is inventory management and control. By avoiding large outlays of cash for products that are on the decline in sales, the business has more working capital to buy products that are on the upswing with consumers.
This also helps to reduce the risk of out of stock items, which can cost a company a lot of money, particularly with those seasonal items. Finally, with the ability to see trends, the company can also adjust staffing and plan the expansion of the business based on more than just an impression as to the possible outcome.