Written by Ruvisha Pillay | Contributor Elaine Marinaki

“The app does my forecasting for me! Trust me, I don’t need to look at it.”

“I happen to know that every month, the forecast runs and it’s all groovy. Why do I need to intervene?”

“It’s the app’s job to forecast, if it’s incorrect, don’t look at me!”

Does that sound like someone you know? Let’s say your colleague Billy-Bob has decided to leave the forecasting solely to the app, without so much as a double check on how sales are tracking vs the forecast. The forecast is an input into the ordering process, so if that forecast is not accurate, Billy-Bob will be ordering stock that will eventually cause items to fall into one of the critical stock statuses (stock out, potential stock out, surplus orders or excess stock). Let us explain why you may have to help some forecasts out manually. Remember to check out the related articles at the end of this article for more learning.

Some examples where the forecasts may need help:

There could be a surge in sales that was unexpected. Perhaps your forecasted sales for February is 200 units of monster truck toys. There’s a new kids’ show on television that has caught the attention of all the little ones, and suddenly your sales for the first week of February are already at 150 units! If we do some quick math, we can immediately see a problem. There are 4 weeks in February and you’ve already sold 75%of your forecast in the first week. This could be an issue if you do not have enough stock on hand to satisfy all the unpredicted customer orders. How do you know if you have enough stock for all this new demand? You would first need to adjust the forecast so that the app can use the new, accurate forecast to work out if any more orders need to be placed and if any potential stock outs are on the horizon. Remember, the app does monthly forecasting, so if there is a large forecast variance during the month, the app will not adjust itself. It does, however, let you know that there are forecast variances for you to review and address. The month-to-date forecast exception reports will help to identify this. This will allow you to manage the forecast by exception, rather than having to review the forecast of every single item (which is helpful if you have many SKUs). You can view this by clicking on the “Forecast” option on the left pane of your app.

Once selected, you will be presented with the Forecast screen (sources of help indicated in red below).

The Sales exceeds forecast and Forecast exceeds sales panels are useful in comparing a period of sales history to the forecast, to gauge where there are large variances and plug those gaps. To read more about this, head over to the All about Forecast Adjustments article.

This category of items requires market intelligence, which only you and your business would have access to. These items are items that are to exit the business. It could be items that are being run down naturally or that will have a firm date where it will no longer be sold. Either way, you would need to adjust the forecast according to the exit strategy for the item. This will prevent the app from generating recommended order quantities that will not be in line with reducing the inventory of this item.

If there is an upcoming promotion, the forecast needs to be adjusted accordingly. By adjusting your item’s forecast upwards during promotional periods, you are ensuring that you will be able to place the right orders to satisfy increased demand over the promotion period. Remember to increase the forecast at least the length of the lead time before the start of the promotion so that you have enough time to order the stock in to arrive before the promotion starts..

Gaining or losing a customer will affect the sales for your items. Let’s be optimistic. You have gained a new customer and that customer is predicted to almost double your sales. Without manually adjusting your forecast to account for the increase in sales, your inventory may not be enough to satisfy the increased demand. Why? Because the orders will be based on the lower forecast. It would not be ideal to lose a sale (and a potentially loyal new customer) when it could have been avoided by adjusting the forecast and keeping the optimal stock on hand.

On the other hand, if you have lost a customer, your orders will be based on a forecast which includes the customer’s usual orders. This means, you may end up in an excess stock situation.

If you are stocking a new item, there would not be necessarily enough data available for forecasting. You can have a look at the article What are new items? for information on what classifies as a new item. You can manually input a forecast based on your predicted sales. To help, the app offers you the Supersessions tool which can be used for new items that are replacing old items. The way this works is that the app would look at the sales history of the item being replaced, and generate a fitting forecast for the new item. This forecast may then need tweaking by you to make it more realistic. For example, if you are replacing an old design of a shampoo bottle by a fancy shampoo bottle with a stunning new design and formula, you might expect your sales to be higher than the shampoo bottle with the old design. You can build that increase into your forecast for your new design. If you would like to make use of Supersessions, please reach out to our support team (all customers) or your Customer Success Consultant (for new customers). Feel free to read the article on Supersessions for more information.

Forecast checks serve as an important part of the forecasting process to help ensure your forecasts are as accurate as they can be. You may have to intervene and manually adjust forecasts from time to time. Keep in mind that the forecast over the Cover Forward period should always be as accurate as possible because the forecast over that period is used in the calculation for “today’s” recommended orders. Read Cover forward period: How are LT, SS and RC converted from days to units? for more information on the Cover Forward period. The All about Forecast Adjustments will give you detailed information about how to go about adjusting your forecasts.

Remember, throughout the app you can find sources of information and help, in the form of articles, in-app help tours, videos and a live support chat. Refer to this article for more information on your sources of support: Where can I get additional help and/or information?

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