When you want to make the most of your inventory forecast, it can be important to define just how much you are spending and create a worthwhile budget to ensure you don’t overspend. This is easier said than done of course, and the traditional methods used may not always function as you’d like. With this in mind, let’s take a look at the benefits of inventory price forecasting and 3 unexpected ways to optimise your budget.
A quick look at the benefits of inventory price forecasting
When you sit down and take note of your potential inventory for the next trading quarter and how much tools, supplies, packaging and even shipping costs are going to set you back, you’ll be better equipped to budget for your upcoming needs. The additional benefits of price forecasting will give you the ability to:
- Optimise your supply chain
- Define areas where you can save money moving forward
- Ensure inventory never runs low, so you’ll never have to turn down custom
- Protect your business from logistical problems
- Prevent underselling
- Predict and budget for future sales
- Improve storage
- Potentially predict market trends and get in on the action with little downtime
Top 3 unexpected ways to optimise your budget
- Analyse your core metrics
It can be extremely important to understand your core metrics and KPIs as these will give you a deeper insight into both how and where you are spending money, as well as identify any areas that could be improved for better productivity, cost-effectiveness and more.
Take a look at your:
- Sales velocity vs. average sales
- Lead time
- Economic order quantity (EOQ)
- Reorder point (ROP)
- Average inventory
- Inventory turnover
- Safety stock
Define what is lacking or even over-performing and create a plan that will help to balance your outgoings and increase your turnover.
- See if any processes could benefit from automation
Sales forecasting tips will always advise a comprehensive sales log to ensure you stay on top of the day-to-day processes of your business, but this can be incredibly time-consuming and take you away from other areas that could need your attention. The time and effort spent logging details could affect your productivity and in turn, your potential to earn (as well as the ability to distribute those earnings across your inventory), so it may be time to look at automated software that can perform tasks like contacting suppliers, reordering, updating inventory logs and more.
- Use inventory forecasting software
Going hand in hand with the above, inventory forecasting software could help you to predict labor needs and account for unpredictable changes in order volume. With this knowledge, you’ll be able to potentially reduce inventory carrying costs and budget better with a higher level of accuracy for your future forecasts.
Inventory price forecasting doesn’t have to be expensive or complicated
There are so many worthwhile tools and services out there designed to help with inventory price forecasting and budgeting that even if they do cost you a fee, it’s likely to be small and save you a more significant amount in the long run.