Three Main Causes of Inventory Forecasting Inaccuracies

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Like the weather reports, it’s literally impossible to get inventory forecasts to 100% accuracy, but you should work to get as close as possible.  Overstocking the warehouse or dealing with stock-outs can be very expensive mistakes.  The trick is to get as close to your target as possible and there are three common roadblocks that can really mess up your calculations.

  1. Poor supplier communication:  Many businesses or distribution software will look at the last three shipments to determine supplier lead time.  However, what you may not know is that rainy season has flooded your suppliers inventory or washed out roads.  Strengthening supplier relationships and being aware of possible supplier interruptions can help you plan better.
  2. Poor customer communication:  You can’t assume that your customers are going to order the same things year after year.  Your customers also have sales goals and product goals.  At any time they could switch focus from one product line to another.  Working together, you can determine what their plans are for product lines and you can reassess your inventory forecasts accordingly.
  3. Poor technology and product popularity:  What’s hot this year, probably won’t be next year.  You don’t want to stock up on a product that’s becoming obsolete or run out of the hot-sellers either.  You may be able to identify product trends based on your customer’s sales goals, as well as data from your own technology.  Using an advanced distribution solution can help you identify trends so you can have your fingertips on latest product craze and what may become yesterday’s news.  NAV-X for example, will easily collect and organize all of your supply chain and  inventory information and turn volumes of data into something you can use to get closer to your inventory forecasting targets.

Managing inventory and creating more accurate inventory forecasts is just like the weather – always changing.  Communicating with vendors and customers can be significantly helpful with maintaining a balanced inventory, but you can use a powerful distribution solution, like NAV-X, to get even closer to target goals.  Contact NAV-X, LLC for more information about removing common roadblocks and creating more accurate inventory forecasts with NAV-X.

By Sheldon Kralstein of NAV-X, LLC, Advanced Distribution Solution for Microsoft Dynamics NAV (

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