Have you ever watched the weather forecast then gone out prepared, only to find you’re wearing waterproofs in the sunshine, or shorts in the rain?

Annoying isn’t it?

The same applies to forecasting your stock levels.

You need to be prepared for expected demand. But carry too much stock and it ties up precious resources and could even cost you money, while having too little stock can risk you losing sales.

Its critical to strike the right balance

In October I worked with a client to resolve just this issue, by configuring their system forecast, demand history and max/min values.

I quickly discovered that their demand history was incorrect, the years and periods all wrong, and the max/min values had to be maintained manually – a time-consuming process that was liable to human error.

We agreed that the best solution was for me to rebuild the demand history and reconfigure the system, so that the system forecast (an average monthly demand) could be accurately calculated and then the max/mins automatically generated.

In just a few hours I was able to rebuild the demand history, going back several years, using their sales analysis.

To create a forecast, I used a method that takes the last 12 months’ demand, removes the highest and lowest values (possible anomalies) then creates an average based on the remaining 10 months.

I identified the recent trend by taking the average of the last three months.

Applying these two averages to each other, I was able to produce a rough monthly demand with a trend built-in.

System forecast can be a rough monthly demand

Using spreadsheets I’d set up, I was then able to untangle and make sense of the system’s forecasting and max/min calculations. The system can now automatically calculate the monthly demand, and from that the max/min values.

This took the mystery out of their stock forecasting, and means they now have a system that can accurately and automatically forecast stock levels, adjusting to reflect changes in demand, whether up or down. In addition, this has got rid of the need to manually update the max/min values, which removes the risk of human error while freeing up hours that could be spent much more productively.

The client couldn’t have been happier. They now have a system that works as it should, and I’m on hand for any quick queries or tweaks – if needed.

“The work Kieran has done for the company has been fantastic.

With our customer base increasing, we really had to utilise our system better.

Forecasting was always at the front of our mind, to allow us to work smarter and efficiently, but the cost would have been too much of an outlay. But with the service and competitive rate Kieran offered, we were able to start our forecasting work.

Kieran’s work, professionalism and most importantly his interaction with the customer makes him our first choice. Any new projects we will always use Kieran.”

Ryan Cairley, Project Manager, LSK Supplies