Demand Forecasting is a feature that will help you estimate your future sales quantity and place purchase orders for your stock on time to meet the demand. This will help to prevent your products from going out of stock or from over ordering variants that aren't selling well.
Building a Forecast
To build a forecast, go to Intelligence > Forecasting.
To get the latest sales figure included on the forecast, you will need to build a new forecast. You can choose to build a forecast with either weeks or months coverage. Building a forecast for 4 weeks means that you would like to know if you have enough stock to cover for the next 4 weeks. Once you have selected the forecast coverage, click Build Forecast.
Only one forecast can be built each time. The time needed to complete it will also depend on how many SKUs are included in the forecast. An email will be sent to you once this is completed.
Once the forecast is built, you will be able to see the quantity you need to reorder for each SKU. Other details such as Supplier, Location, Stock out date, Added to Draft, and Forecasted Sales will also be displayed.
- Forecasted Sales - refers to the expected amount of sales within that forecast period. We use a moving average based on your historical sales trend to predict your sales and calculate when you will run out of stock if you don't order.
- Stock out date - indicates when your stock will sell out. This date also accounts for the date of stock that is incoming.
- Quantity to Reorder - suggested amount of stock you need to order for your selected cover period. This quantity also accounts for stock that is incoming.
- Added to Draft - refers to the stock currently on draft purchase orders created from a forecast.
Forecasted Sales is calculated using Smooth Moving Average to know more about how this model works, please refer to this article.
You will also be able to add the reorder quantity on the Forecast detail page for your purchase order.
Creating a Purchase order
After the Forecast Details are generated, the next step is to create a purchase order. You can do this by clicking “Add” on the reorder quantity of the variant.
We consolidate purchase order line items for the same supplier and location into a single purchase order. When you click “Add” to a variant. We check if there is a draft purchase order for the same Supplier at that Location. If there is, then the variant will simply be added to that draft purchase order. If there is no existing draft purchase order for that Supplier and Location, then a new draft purchase order will be created. This prevents you from creating too many purchase orders per supplier and location.
It is also important to note that you will not be able to add a variant to a purchase order if there is no Supplier selected.
Once a draft purchase order has been created, you will see the purchase order detail. You can immediately access it by clicking on the purchase order.
After you have verified the items, you may then approve the purchase order. If you wish to go back to the forecast, you can simply click on the forecast link on top.
Well done! You have completed generating a forecast and purchase order inline with the forecasted quantity.
- This feature currently does not support bulk workflows.
- It cannot suggest when to order based on your lead times (coming soon).
- Forecast information will not be available on products that have less than 50 days of historical sales data. But they will still be visible in your forecast table.
- Variants with no sales will not appear in your forecast table.
- The sales quantity for composite products are not added to the sales quantities of the individual SKUs.
Also, forecast models for the following are currently not supported.
- Intermittent demand
- New products
- Spikes in demand
- Lost demand due to products going out of stock