Forecasts will help your business to analyse past patterns of stock behaviours and devise strategies to allocate product for specific periods in order to maximise sales. Stock demand can be affected by consumer behaviour, advertising and promotions, as well as external factors, such as the weather.
Clipper Logistics’ chief commercial officer Carl Moore advises working closely with your fulfilment partner, which will “often be partnered with other big retailers that see the same conditions as you, meaning you can get a better understanding of the consequences of different stock behaviours and solutions”.
A 12-week rolling forecast is the most effective, says Moore, in order to be reactive.
“The further data disappears off into the historic distance, the less relevant it becomes,” he explains. “Even when taking into account prior years and seasons, there is a lot of guesswork. This is because we know that what sold well last year is subject to a whole series of vagaries: what competitors are doing, what trading is doing, the weather, the brand and its relevance.”
To combat this, businesses should build in a margin of error into their forecasting solutions.
When looking at supply chain data, it is also important to consider each channel – retail, wholesale and ecommerce – distinctly.
“Each of the major channels has its own different cycles, timelines and characteristics, so quite a lot of thought has to go into what the predictions are for each particular segment,” says Moore.“An example of this would be if you’re a small retailer and you get one delivery a week from your major suppliers and expect it to be on sale within an hour. That’s going to create labour and resource spikes, which may be the way you want to do business because you want to be super competitive and put product in customers’ hands a quickly as possible.”
Understanding the velocity of stock needed for each channel is important in your predictions and analysis.
“Think about how frequently you’re ordering product and how quickly it needs to be made available,” says Moore. “Some retailers allocate specifically to each channel, whereas others have a first come first served stock pool to try and improve efficiency and the speed at which they get things out to customers.”
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