Quick Summary: Stock Projection provides forward-looking visibility into inventory performance based on current data, demand forecasts, and policy settings. Assess projected stock levels, fill rates, stock turns, and supplier order requirements for the next 12 months to verify planning inputs.
Why the Stock Projection Matters
Stock projection acts as a "crystal ball" for your inventory. It takes your current stock position and projects it forward to predict:
Projected Stock Value: How much capital will be tied up in inventory?
Fill Rate: Your predicted ability to meet customer demand.
Recommended Orders: The future orders you will need to place with suppliers.
By analyzing these projections, you can assess if your current settings (like replenishment cycle or target fill rates) are realistic for your budget and warehouse capacity.
Key Drivers of the Projection
Several factors significantly influence the accuracy and outcome of your projection:
Demand Forecast Adjustments: This has the biggest impact. If forecasts are manually adjusted to reflect a dramatic increase that doesn't materialize, your projection will be overly optimistic.
Imbalanced Stock (The "Initial Spike"): If your current stock is out of balance, meaning many items are out of stock and many other items currently have excess stock, the app will immediately propose replenishing the out-of-stock items. However, should the value of excess stocks not deplete at the same rate, there may be an initial increase in the closing stock values.
Target Fill Rates: High fill rates force the system to recommend more orders and hold more inventory. If your projection shows a large "spike" in stock holding, your current fill rate targets may be too aggressive for your budget or space.
Data Quality: Unrealistic lead times, inaccurate Minimum Order Quantities (MOQs), or old open orders that haven't been closed will distort the projection.
Understanding the Projection Tabs
The projection tool is divided into specific tabs, each analyzing a different aspect of your inventory's future.
Summary Tab
The Summary tab provides a 12-month overview of the projected health of your inventory. It is designed to show you:
Whether your inventory value is decreasing (coming down).
Whether your fill rate and stock turns are increasing.
The forecast demand value.
The value of ideal order recommendations.
When existing purchase orders and ideal replenishment orders are projected to be receipted.
Interpreting the Graphics
Inventory: The Inventory graphic projects your closing stock value, where the initial value (far left) is the projected month-end value, the final value (far right) is the projected value at the end of 12 months, and the purple line charts the closing balance at the end of each month, starting from the end of this month.
Fill Rate: Projects your product availability. You should view this in conjunction with the Inventory graphic. A positive outcome is typically:
Investment in inventory reduces and Fill Rate increases.
Investment in inventory stays the same, but Fill Rate increases.
Fill Rate stays the same, but Investment in inventory reduces.
Stock Turns: A measure of how many times you will sell your stock-on-hand value over the next 12 months. A good outcome is when the projected stock turn at the end of the period is higher than at the beginning.
Demand: Shows total forecasted demand (Sales + BOM + DC) by month, for the next 12 months.
Note: The first point shows the demand for the remainder of this month, whilst every other point shows the demand for the entire month, therefore, this point may be significantly lower if your projection is done towards the end of the month
Recommended Orders: Shows the value of the next 12 months of recommended orders, over and above what you already have on order.
Receipts: Shows when orders should be delivered.
Brown bars: Receipts for existing/outstanding purchase orders.
Green bars: Receipts for the recommended orders calculated by the projection.
Inventory Tab
This tab extrapolates inventory values 12 months into the future. It highlights:
Closing stock: The closing stock for the next 12 months (black line)
Excess stock: Inventory identified to be above what is required (light red band)
OK: Balanced inventory (light grey area)
Firm receipts (Brown bars): Receipts for existing/outstanding purchase orders (brown bars)
Projected receipts (Green bars): Receipts for order recommendations (green bars)
Note: All projected values are calculated using average cost to enable a like-for-like comparison.
Click Table to display the data used to plot the inventory graphic in tabular format.
Fill Rate Tab
This tab focuses on service levels and efficiency:
Fill Rate: Your ability to supply customers.
Stock Turns: How many times you will sell your stock value in a year.
Cover Days: How long your current stock will last.
Good outcomes include:
Higher fill rate
Higher stock turns
Lower cover days
Click Table to display the values for Fill rate %, Stock turns, and Cover days in tabular format.
Note: The projected fill rate is calculated using customer sales demand only. Distribution and manufacturing demand are excluded to prevent double-counting across multiple locations. As a result, filtering to locations that have only DC or BOM demand will display a projected fill rate of 0%.
How Projected Fill Rate is Calculated
It is important to distinguish between historical and projected fill rates.
Historical Fill Rate: The fill rate shown on the Dashboard and Inquiry screen is based on history (stockouts over the last 30 days).
Projected Fill Rate: The fill rate shown here is an estimate of the future.
Within Lead Time: The projected fill rate is 100% if we expect to have stock, and 0% if we expect not to.
Outside Lead Time: It will be 100% if we are above the projected max level; otherwise, it will equal the Target Fill Rate.
Note: Only stocked items are included in fill rate calculations.
Replenishment Tab
This tab focuses on the supply side:
Recommended Orders: Future ideal orders (light brown bars).
Firm Receipts: Incoming stock from existing orders (brown bars).
Projected Receipts: Incoming stock from future ideal orders (green bars).
Click Table to display the values for Recommended orders, Projected receipts, and Firm receipts in tabular format.
Demand Tab
This tab breaks down all predicted demand streams, including:
Forecast & SOs: Sales to customers.
BOM Demand: Manufacturing requirements.
DC Demand: Supply to other branches.
Sales Orders: Firm customer orders.
Click Table to display the values for Forecast, BOM demand, DC demand, and Customer orders in tabular format. You are also able to view the Stock out adjustment and Lost Sales values.
Stock Out Adjustment
This metric indicates the net value of demand added or removed from a month due to availability.
Negative Value: Demand could not be fulfilled in that month due to a lack of stock.
Positive Value: Demand is fulfilled in that month because stock arrived to cover unfulfilled demand from prior months.
Example: If you are out of stock in July (-300k adjustment) and August (-700k adjustment), but a large shipment arrives in September, the September adjustment might be +1m as it fulfills the current month plus the backorders.
| Jul-21 | Aug-21 | Sep-21 |
Stock out adjustment | -300k | -700k | 1m |
Lost Sales
This value represents sales you will never recover due to a stock-out.
Within Lead Time: Based on projected stock position and demand discarded according to the back-order percentage.
➜ For more on this topic, read: Policy - Projecting back orders
Outside Lead Time: Calculated based on the target fill rate.
Formula for projected lost sales (outside lead time):
(100% – target fill rate%) × (100% – back order%) × total demand
Filters
Filters determine which groups of items are used to calculate the projection.
Select an Existing Filter
Choose from saved filters in the dropdown.
Create a New Filter
Click Filter to define and save a new filter.
Specify the criteria
Give the filter a name in the "Save filter as" field
Click Save
Download data
Information can be downloaded to a CSV file. This download includes both the filters used to run the projection and the values for every graphic shown on the summary tab, broken down by month for the next 12 months.
⚠️ Watchouts
Spikes in Stock: A sudden spike in projected stock often means your current stock levels cannot support your aggressive fill rate targets. Consider lowering the target fill rate for selected groups to smooth this out.
Data dependency: Projection accuracy depends entirely on realistic forecasts, clean data, and correct lead times.
Projected fill rate scope: The projected fill rate is calculated using customer sales demand only. Distribution and manufacturing demand are excluded to prevent double-counting across multiple locations. As a result, filtering to locations that have only DC or BOM demand will display a projected fill rate of 0%.
Stocked item filtering: Inventory projections should be filtered to stocked items only. Including non-stocked items can produce misleading results because forecasted demand for non-stocked items is included in demand calculations but excluded from closing stock calculations. As a result, closing stock values may not align with stock on hand minus demand plus receipts.
💡 Tips
Hover for Details: On any graphic, hovering over a line or bar will display the exact value for that specific point in time.
Use Filters: View high-value or high-risk groups first.
Watch the relationship: Compare Fill rate vs Inventory value to judge efficiency.
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