Let’s take a look at a successful store all over America. Demand forecasting is the way to stay ahead of what consumers are going to want. Read this article to learn how inventory forecasting can be beneficial to your company.
Demand planning is a complex process that involves and affects multiple elements of supply chain. Companies that sell products or services to consumers face demand. The term ‘demand’ is fairly self-explanatory. It represents what consumers want. The thing about demand is, in a way it’s like a shape shifter. It changes depending on the time of year, economy, consumer profile, location, competition, along with other factors. Understanding demand is fundamental to the success of a company.
Let’s say a company has a wonderful and proven product for sale. They know how great it is, and they keep their shelves stocked with what they think is the best option for their consumers. This method isn’t going to be effective because it’s not based on actual consumer data. Having a good product is important, but demand levels can’t just be assumed. It would be nice to plan on desired demand, but there’s more to it than that.
Demand forecasting software takes different data into account to predict what consumer demand is going to be. This data includes historical sales, consumer profile, locations, and more. Some forecasting options are better than others, so it’s important to do the research to find the best fit for your company.
How do companies do it?
It can seem daunting to manage hundreds or thousands of SKUs as individual products each have different amounts of demand. Items can be sold online and in-stores, so demand also varies depending on the selling location.
A good example of demand forecasting and planning is seen in the company Bath and Body Works, hereafter referred to as BBW. BBW is known for their unique and quality products. They offer products in many different scents, and product type varies depending on the scent.
BBW products are organized in the following categories: new & now, body care, hand soaps & sanitizers, home fragrance, gifts, and top offers. Each of these offers a large variety of products ranging in scents. Some scents are only offered in household products, like air freshener, and not body care items, like perfume. Some scents are offered in more than just body care items, but not all household products.
Going into a BBW store can be overwhelming to your eyes and nose at first. However, if you take a closer look, these stores are organized in unique and effective ways. They have locations for their most popular scents, and there you can find all body care products. They organize items like hand sanitizer and candles in large groups of many different scents. The specialty and featured products are usually in little display areas that are easy to find.
Something else to consider, is BBW is very active in their promotions and sales efforts. They have huge sales throughout the year. Leading up to the holidays they have different deals depending on the day. Sometimes it’s hand soap for $2.95, originally $7.50, or single-wick candles for $5.95, originally $14.50.
BBW have so many products, and they have so many different sales and deals going on throughout the year. To the common eye, it looks like an impossible task to not only keep the stores stocked with all these different products, but to have the ones consumers are going to want. BBW does sell out of their most popular scents, but they typically have products their consumers go to buy.
I was recently in a BBW store on the $2.95 hand soap sale day. People around me were going crazy with the soap! The lady in front of me bought 20 bottles of soap, and she wasn’t the only one! I went back 2 days later to find soap shelves that were fully stocked and didn’t show the absolute shopping spree that had taken place 48 hours previously.
To really drive this point home, let me tell you a little bit about where this BBW store is located. It’s in a small town in southern Idaho, and it’s in the only mall in the area. It’s not likely that this BBW can call and have a shipment in just a few hours.
What does this mean? Well, BBW has adequately prepared for their consumer demand throughout their holiday promotions. There’s no possible way they can guess how many people are going to want what products in different scents, and have sales all the time, keep fully stocked shelves, and stay afloat financially.
BBW uses extremely effective demand planning methods. This is shown in their accurate inventory levels, and they really seem to know what they’re doing.
Inventory forecasting software allows companies to adequately plan their inventory. Users can say goodbye to overstock and stockout issues, and the problems caused due to them. These advanced solutions are necessary for any business that wants to succeed in today’s market.
If you offer a product of service to consumers, you can absolutely benefit from demand forecasting and planning software. If you’re interested in learning more about these solutions, reach out to experts today! There are so many benefits just waiting for you.
