Inventory
Management 101 _Forecast Planning
For years, I
was working for a multi-level marketing company for materials planning and
control.
Inventory
forecast and reorder plan has been the frequently asked questions during the
weekly material planning cycle.
For the Business
environment where forecast accuracy is less than 30%, what is the forecast
planning key elements?
Accurate
inventory demand planning enables near to accurate of inventory holding without
over or under stocking. Historical sales
trends and market knowledge of the event or timeline of which could influence
the demand fluctuation is crucial.
What is
Forecast Planning for Inventory Management?
Inventory
Demand Forecast planning is the analytical process of analysis the demand of an
inventory item over a defined period of time.
The period of time could be ranging for 4-8 weeks for a more accurate
planning.
What is variables to
be considered?
1.
Lead
time
a.
Lead
time covers from the time Purchase Orders were place till the Inventory to
reach the door.
b.
There
should be sufficient inventory to cover the whole duration of lead time
2.
Minimum
Order Quantity(MOQ)
a.
The minimum order quantity to reach the
economic of scale for the purchase.
b.
Evaluation is needed if the MOQ
3.
Inventory
SKUs with seasonal mode
a.
Further
evaluation would need for items that could be increase in sales during any
festive seasons. These especially applicable for multi cultural society.
4.
Items
that are bound for import and export regulations
5.
Items
that has shelf life restrictions
The formula for Inventor Forecast Planning, is 1+1 always equal to 2?
The following
Inventory Management 201 series will review the quantitative techniques.
About the Author
Grace is a freelancer for Supply Chain Management specialized in helping companies reducing operation costs and increase profits through optimized Supply Chain, Sourcing and Procurement Operation.
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