How to Optimize Inventory Levels through Demand Forecasting

Accounting for seasonal variations and other factors affecting sales volumes is vital in a dynamic business world.

For instance, what an ice cream parlor may experience as a spike in sales during summer might be a corresponding dip in the winter season.

This, therefore, calls for a continuous analysis of sales data, which can lead to accurate predictions if the trends are examined over a long period.

Considering the analyzed patterns, you can tailor your customer demands to forecast future sales, align with any fluctuations, and ensure optimal inventory.

Sage X3 helps businesses become more efficient by providing demand management and forecasting features. These features enable the prediction of future sales needs based on past customer behavior, data, and analytical insights.

The demand forecasts function allows users to enter and view demand forecasts for a product at a given site and generates orders of the SOS type (suggested sales order). This helps the stock manager minimize any potential out-of-stock occurrences.

Forecasts can be entered for ‘purchase for resale’ and ‘finished good’ items.

Consider the example in the screenshot below:

Navigate to: Stock> Reorders> Demand forecasts

Enter the site for the product for which you intend to create a demand forecast, the start and end dates for the forecast, and then key in the monthly demands.

Forecasts can be defined and distributed in weekly ‘buckets’ to sum up to a monthly total.

A percentage of forecasted total demand will be given per period/month based on the defined start and end dates.

Click on the show graph icon to view the demand forecast data in a graphical format.

Also, upon clicking the WIP icon on the right of the screen, you can efficiently search and view the suggested sales orders in a list or graphical format as well, saving you time and effort.

The graphical format gives a view of the monthly stock requirements to fulfill the forecasted sales demand.

This is a necessary tool in today’s volatile economy. Businesses can use it to plan for and adjust their customer demands according to real, up-to-date data and plan intelligently for the future.

By carefully considering the sales patterns and planning for customer demands, businesses acquire the necessary insights for maintaining the appropriate safety stock and reorder point levels, which we will look at in our next blog to enhance our knowledge of optimal stock level management.

Stay tuned!

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Greytrix Africa is a leading Sage business partner and ISV Partner offering Consulting, Implementation, and development services for Sage X3, Sage 300, Sage 300 People (HRMS), Sage CRM, and Sage Intacct, which covers East Africa, West Africa, SADC, and Middle East region. We offer professional services such as Implementation and Configuration, Business Process Analysis, Project Management, Integrations and Migrations, and Technical & Functional Support, along with enhancements within Sage X3, Sage 300 People (HRMS), Sage 300, Sage CRM, and Sage Intacct across various industry verticals like Process Manufacturing (Food & Beverages, Chemical), Discrete manufacturing (Automotive, Textile & Apparel), Non-Profit, Health-care Industry and Services Industry (Financial, Software & Engineering), Distribution (Transportation & Logistics), and Agriculture.

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How to Optimize Inventory Levels through Demand Forecasting