Parts Inventory Forecasting With New Age Technologies When it comes to fulfilling consumers’ demands on time, inventory forecasting emerges as a highly effective method to accomplish a smooth sales flow. OEMs worldwide use the forecasting technique to assess which products will be out of stock and how many products are not getting enough attention from customers.
In simple words, inventory forecasting is a planning technique to update inventory levels and make sure there are no delays in order fulfillment. An efficient inventory forecasting system allows companies to project order gaps and optimize production operations to prevent overstocking and other challenges of supply chain management.
However, the projection of future sales is a complex process as it involves the evaluation of previous sales and comparison with existing stock in the inventory. In hindsight, this is one of those manufacturing operations that are prone to human errors. Therefore, many OEMs now rely on software platforms to automate inventory management.
Let’s explore how manufacturers leverage digital platforms to streamline the process of inventory forecasting with ease!
Forecasting & Replenishment - What’s the Difference?
Before we go any further with the role of software applications in inventory forecasting, you need to know that it is significantly different from replenishment or restocking as people often tend to confuse these two terms.
Inventory replenishment is the process of reordering something from the supplier once it is not available in the stock. On the contrary, inventory forecasting refers to the act of analyzing future demands of a particular product based on historical data, user patterns, and some external aspects such as market demand.
Why is Inventory Forecasting Important for OEMs?
- With inventory and product demand forecasting, manufacturers can reduce warehouse costs on a larger scale. They don’t need to splurge on products that already exist in the inventory or are not in demand anymore.
- Data-driven methods of inventory management and forecasting allow manufacturers to boost their sales cycle by keeping spare parts and components that are ordered by consumers frequently. It eventually helps OEMs maintain a strong relationship with their network of dealers and distributors.
- When you have an advanced automated parts inventory forecasting system, you can bid goodbye to recurring error possibilities caused by human error. Moreover, you will also be able to reduce human labor and time consumption along with warehousing costs that usually add up to overhead expenses.
- Optimal efficiency in the supply chain is something that every aftermarket manufacturer seeks. After a successful integration of a forecasting functionality, OEMs get the option to streamline the overall supply chain and easily identify potential discrepancies that are often left overlooked during other operations.
Almost all these benefits of inventory forecasting boil down to reduced warehouse costs and human errors.
How New Age Technologies Help in Inventory Forecasting
New age technology like electronic parts catalog software is an aftermarket solution that allows OEMs to move beyond operational challenges and obtain an error-free supply chain. Different types of platforms have different functionalities and OEMs get to choose these platforms based on their requirements.
Some software applications come with the functionality of quantitative forecasting in which the model is designed to utilize the historical sales data and make predictions for upcoming sales. Such systems are required to be integrated with an existing ERP for it to extract the data and anticipate numerous sales-related possibilities.
Apart from this, some systems use qualitative forecasting that generally analyzes external factors such as economic demands, market trends, user behavior shifts, etc. However, it is a very complicated method and is often managed by experienced professionals with a knack for technology and statistics.
Trend forecasting is another popular method that enables OEMs to keep a close watch on market trends and other regulations. To find the right software, OEMs are required to consult their aftermarket software solutions provider and understand the product with a demo.