Seasonal Velocity is a vital concept for Nineyard users in the realm of stock forecasting. It enables businesses to make more precise purchasing decisions by taking into account the fluctuations in sales volume during specific seasons. This guide aims to explain how Nineyard calculates Seasonal Velocity, thereby enhancing your stock forecasting precision and effectiveness.
What is Seasonal Velocity?
Seasonal Velocity is a measure of the average daily sales volume during a particular season, calculated based on the variations that occur during 'hot seasons' - periods where sales volumes for a particular item increase significantly.
Why is Seasonal Velocity Important?
Regular sales velocity, typically calculated based on the last 30 to 90 days (depending on your velocity settings), may not accurately forecast sales during specific seasons. By incorporating Seasonal Velocity, you account for historical sales data from the same season in the previous year, which provides a more accurate forecast for future sales.
How Does Nineyard Calculate Seasonal Velocity?
Nineyard uses a sophisticated algorithm to calculate seasonal velocity. Let's imagine today's date is 5/17/23, and you're planning to purchase stock to cover sales from 8/17/23 through 11/17/23. Here's how Nineyard calculates Seasonal Velocity:
Identify the Season: Nineyard automatically identifies the 'hot season' based on historical sales data. It recognizes patterns or spikes in sales volume that occurred in the previous year or the year before.
Review Historical Data: Nineyard then reviews the sales data from the same season in the previous year. For example, it will compare the sales velocity from the 'hot season' (8/17 to 11/17) of the previous year (2022) with the sales velocity leading up to the current season (5/17/23 to 8/17/23).
Calculate the Adjustment Factor: Based on the historical data review, Nineyard calculates the adjustment factor for your forecast. If sales were up by 50% during the 'hot season' in the previous year compared to the days leading up to that season, Nineyard will use an adjustment factor of 1.5.
Apply the Adjustment Factor: Nineyard applies this adjustment factor to the regular sales velocity. If the regular sales velocity suggests a purchase quantity of 1000 items, Nineyard adjusts this to 1500 items (1000 * 1.5) to account for the expected increase in sales during the hot season.
This adjusted figure, taking into account the seasonal variation, is your Seasonal Velocity.
Conclusion
Understanding how Nineyard calculates Seasonal Velocity can significantly improve your stock forecasting accuracy, ensuring you're well-prepared for seasonal variations in sales volume. Nineyard's sophisticated approach to calculating Seasonal Velocity leverages historical sales patterns, providing a powerful tool for effective stock management.