{"id":375,"date":"2022-03-12T00:39:05","date_gmt":"2022-03-12T00:39:05","guid":{"rendered":"http:\/\/localhost\/px\/blog\/costly-inventory-forecasting-mistakes\/"},"modified":"2022-08-01T05:27:20","modified_gmt":"2022-08-01T05:27:20","slug":"costly-inventory-forecasting-mistakes","status":"publish","type":"post","link":"https:\/\/pixelfy.me\/blog\/costly-inventory-forecasting-mistakes\/","title":{"rendered":"Are You Making These Costly Inventory Forecasting Mistakes? &#8211; Tips, Tricks &#038; More"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/pixelfy.me\/blog\/costly-inventory-forecasting-mistakes\/#What_is_Inventory_Forecasting\" >What is Inventory Forecasting?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/pixelfy.me\/blog\/costly-inventory-forecasting-mistakes\/#Costly_Inventory_Forecasting_Mistakes\" >Costly Inventory Forecasting Mistakes<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/pixelfy.me\/blog\/costly-inventory-forecasting-mistakes\/#Are_You_Using_%E2%80%9CFalse_Zero%E2%80%9D_Alerts\" >Are You Using \u201cFalse Zero\u201d Alerts?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/pixelfy.me\/blog\/costly-inventory-forecasting-mistakes\/#Are_You_Properly_Accounting_for_Stock_Outs_or_Sales_Spikes\" >Are You Properly Accounting for Stock Outs or Sales Spikes?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/pixelfy.me\/blog\/costly-inventory-forecasting-mistakes\/#Are_You_Actually_Doing_Inventory_Planning\" >Are You Actually Doing Inventory Planning?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/pixelfy.me\/blog\/costly-inventory-forecasting-mistakes\/#Are_You_OverUnder_Calculating_Your_Express_Freight\" >Are You Over\/Under Calculating Your Express Freight?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/pixelfy.me\/blog\/costly-inventory-forecasting-mistakes\/#Are_Your_Lead_Times_ACTUALLY_Accurate\" >Are Your Lead Times ACTUALLY Accurate?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/pixelfy.me\/blog\/costly-inventory-forecasting-mistakes\/#Are_You_Blindly_Following_a_Forecasting_Algorithm\" >Are You Blindly Following a Forecasting Algorithm?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/pixelfy.me\/blog\/costly-inventory-forecasting-mistakes\/#Are_You_Spending_TOO_MUCH_TimeMoney_on_Forecasting\" >Are You Spending TOO MUCH Time\/Money on Forecasting?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/pixelfy.me\/blog\/costly-inventory-forecasting-mistakes\/#In_Summary%E2%80%A6\" >In Summary&#8230;<\/a><\/li><\/ul><\/nav><\/div>\n\n<div style=\"margin: 0 110px;\">\n<p>\u201c<b>Inventory is money sitting around in another form<\/b>\u201d <br>&#8211; Rhonda Abrams, Best-Selling Author, <i>Successful Business Plan: Secrets &amp; Strategies<\/i><\/p>\n<p>\u201c<b>Don\u2019t work for money; make it work for you<\/b>\u201d <br>&#8211; Robert Kiyosaki<\/p>\n<p>\u201c<b>Nothing is more expensive than a missed opportunity<\/b>\u201d <br>&#8211; H. Jackson Brown, Jr., Author, <i>Life\u2019s Little Instruction Book<\/i><\/p>\n<p>&nbsp;<\/p>\n<\/div>\n\n\n\n<p><strong>We all know<\/strong> inventory management is important to our business. Because it is so key to the cash flow and health of our business as physical products retailers, it\u2019s often one of the last things we want to give up control of.<\/p>\n\n\n\n<p>Straddling between an art and a science, it is, along with product selection, the thing that <strong>can make or break your business and your bottom line<\/strong>.<\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Inventory_Forecasting\"><\/span>What is Inventory Forecasting?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Inventory forecasting <\/strong>is the process through which a business determines how many units of a product it will need in order to meet customer demands.&nbsp;<\/p>\n\n\n\n<p>The business can determine this through a number of different processes such as market research, historical sales data analysis, competitor research and more.&nbsp;<\/p>\n\n\n\n<p>In addition to this, businesses also take into account variables that they may introduce themselves. Examples of these are <strong>flash sales, promotions, discount codes <\/strong>and more.&nbsp;<\/p>\n\n\n\n<p>When you perform inventory forecasting accurately, it can help your business save money and ensure that none of the products in your inventory go to waste.&nbsp;<\/p>\n\n\n\n<p>On the other hand, if you perform it inaccurately, you can either <strong>undershoot <\/strong>or <strong>overshoot <\/strong>the mark. The former being if you don\u2019t order enough units to meet customer demand and the latter being ordering too many products.&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-columns are-vertically-aligned-center has-text-color has-background is-layout-flex wp-container-core-columns-is-layout-9d6595d7 wp-block-columns-is-layout-flex\" style=\"background-color:#e2ffee;color:#292d34\">\n<div class=\"wp-block-column is-vertically-aligned-center is-layout-flow wp-block-column-is-layout-flow\">\n<p><em>Tip: Use an Amazon Inventory management software. <\/em><\/p>\n\n\n\n<p><strong><em>Amazon inventory management software\u00a0<\/em><\/strong><em>analyzes your sales channels and provides suggestions to reduce carrying costs and mitigate fees.\u00a0<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"Costly_Inventory_Forecasting_Mistakes\"><\/span>Costly Inventory Forecasting Mistakes<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If you\u2019ve been in this business for more than a minute, you\u2019ve almost certainly experienced stockouts, as well as the pain of overstocking on a dud product.<\/p>\n\n\n\n<p>The expense of these mistakes, both in lost opportunity and hard costs, can be tough to stomach.<\/p>\n\n\n\n<p><strong>So why does it still seem so hard to get it right?<\/strong><\/p>\n\n\n\n<p>We see the pattern continue time and time again, stock out for what you claim is \u201cTHE LAST TIME!!!\u201d, <strong>research and acquire recommendations for inventory management software, settle on one, try it for a couple of weeks, ditch it, it doesn\u2019t work for you. Go back to your Excel spreadsheet and old system<\/strong>.<\/p>\n\n\n\n<p>The system you know. The system that works.<\/p>\n\n\n\n<p>The system that caused you to stock out\u2026<\/p>\n\n\n\n<p>So what is the problem, really then?<\/p>\n\n\n\n<p><strong>Maybe it\u2019s the way you\u2019re looking at inventory management<\/strong>. Below are some pro management tips that will help you better dial your forecasting systems.<\/p>\n\n\n\n<p><strong>And at the end of this article, I\u2019m going to tell you how you can integrate these pro tips into your inventory management practice seamlessly<\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Are_You_Using_%E2%80%9CFalse_Zero%E2%80%9D_Alerts\"><\/span>Are You Using \u201cFalse Zero\u201d Alerts?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Better known as buffer stock, <strong>a false zero alert is a trigger that tells you to order <em>before<\/em> you hit your pre-set buffer amount<\/strong>. So, if your pre-set buffer is 250 units, you will be alerted to start the reorder process in time to fulfill <em>before<\/em> you hit 250 units left at Amazon, <em>not<\/em> before you hit 0.<\/p>\n\n\n\n<p><strong>You can see how this would work:<\/strong><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/blog.pixelfy.me\/storage\/app\/uploads\/public\/5e6\/ac2\/736\/5e6ac2736975e115350583.png\" alt=\"FBA Buffer Stock\"\/><\/figure>\n<\/div>\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/blog.pixelfy.me\/storage\/app\/uploads\/public\/5e6\/ac2\/b6d\/5e6ac2b6d939e625089465.png\" alt=\"FBA Buffer Stock\"\/><\/figure>\n<\/div>\n\n\n<div style=\"text-align: center;\"><\/div>\n\n\n\n<center><small><strong>Learn more about this tool<br><a href=\"https:\/\/www.sostocked.com\/sostocked-59-mo-for-lifedou12dl8?affiliate_id=2156526\" target=\"_blank\" rel=\"noopener\">here<\/a><br><\/strong><\/small><\/center>\n\n\n\n<p>This 250-unit buffer acts as a <strong>\u201cfalse zero\u201d to warn you that you need to replenish inventory sooner in case of any real-world delays.<\/strong><\/p>\n\n\n\n<p>For example, you have an unexpected customs hold. Or there is a typhoon off the coast of China that delays your ocean freight.<\/p>\n\n\n\n<p>If you are always cutting it close to zero, <strong>any delay of a couple of<\/strong> days or longer could mean a stock-out<strong> disaster.<\/strong><\/p>\n\n\n\n<p><strong>Buffer stocks are your inventory safety net<\/strong>, ensuring you can weather those storms.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Are_You_Properly_Accounting_for_Stock_Outs_or_Sales_Spikes\"><\/span>Are You Properly Accounting for Stock Outs or Sales Spikes?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Are you still using straight, unfiltered data to gage your inventory needs, whether doing a crude estimate for this quarter based on last quarter\u2019s sales, or something more complex like an average of your 180, 90, 60 &amp; 30 Day averages?<\/p>\n\n\n\n<p>If you had a stock out or sales spike rolled up in there, <strong>chances are, you\u2019re making a common inventory management mistake.<\/strong><\/p>\n\n\n\n<p>It may not seem like a big deal <strong>but when you look at the hard numbers, you can see what a difference it can make, and how it affects your bottom line.<\/strong><\/p>\n\n\n\n<div class=\"wp-block-columns are-vertically-aligned-center has-text-color has-background is-layout-flex wp-container-core-columns-is-layout-9d6595d7 wp-block-columns-is-layout-flex\" style=\"background-color:#e2ffee;color:#292d34\">\n<div class=\"wp-block-column is-vertically-aligned-center is-layout-flow wp-block-column-is-layout-flow\">\n<p><em><strong>Tip: <\/strong>Using a link shortener <a href=\"https:\/\/pixelfy.me\/\">service<\/a> helps increase traffic. <\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>REMOVING STOCK OUTS<\/strong><\/h4>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/blog.pixelfy.me\/storage\/app\/media\/Table%201.png\" alt=\"Stock Outs\"\/><\/figure>\n<\/div>\n\n\n<div style=\"text-align: center;\"><\/div>\n\n\n\n<center><small><strong>Learn more about this tool<br><a href=\"https:\/\/www.sostocked.com\/sostocked-59-mo-for-lifedou12dl8?affiliate_id=2156526\" target=\"_blank\" rel=\"noopener\">here<\/a><br><\/strong><\/small><\/center>\n\n\n\n<p>If you\u2019re looking at an average of 30, 60, 90 &amp; 180 day sales, your <strong>average velocity is 100 units per day.<\/strong> Your sales projections might look like this:<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\" style=\"font-size:16px\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">180 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">18,000 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">100 units\/day<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">90 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">9,000 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">100 units\/day<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">60 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">6,000 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">100 units\/day<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">30 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">3,000 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">100 units\/day<\/td><\/tr><tr><th class=\"has-text-align-center\" data-align=\"center\">AVERAGE VELOCITY<\/th><th class=\"has-text-align-center\" data-align=\"center\">100 units\/day<\/th><\/tr><tr><th class=\"has-text-align-center\" data-align=\"center\">TWO MONTH ORDER<\/th><th class=\"has-text-align-center\" data-align=\"center\">6,000 units<\/th><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>But, if in the exact same scenario, you <strong>stocked out for 2 weeks in the last 60 days<\/strong> but did not factor that in, your <strong>average velocity would <em>incorrectly<\/em> drop down to 88 units per day.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">180 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">16,600 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">92.2 units\/day<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">90 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">7,600 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">84.4 units\/day<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">60 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">4,600 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">76.6 units\/day<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">30 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">3,000 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">100 units\/day<\/td><\/tr><tr><th class=\"has-text-align-center\" data-align=\"center\">AVERAGE VELOCITY<\/th><th class=\"has-text-align-center\" data-align=\"center\">88.3 units\/day<\/th><\/tr><tr><th class=\"has-text-align-center\" data-align=\"center\">TWO MONTH ORDER<\/th><th class=\"has-text-align-center\" data-align=\"center\">5,298 units<\/th><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>If you placed your order based on this faulty forecasting for a two-month order, you\u2019d be short 702 units. If your profit were $5 per unit, <strong>that would be a loss of $3510<\/strong>.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>REMOVING SALES SPIKES<\/strong><\/h4>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/blog.pixelfy.me\/storage\/app\/uploads\/public\/5e6\/abd\/b7e\/5e6abdb7e2d55042900092.png\" alt=\"Sales Spikes\"\/><\/figure>\n<\/div>\n\n\n<div style=\"text-align: center;\"><\/div>\n\n\n\n<center><small><strong>Learn more about this tool<br><a href=\"https:\/\/www.sostocked.com\/sostocked-59-mo-for-lifedou12dl8?affiliate_id=2156526\" target=\"_blank\" rel=\"noopener\">here<\/a><br><\/strong><\/small><\/center>\n\n\n\n<p>Now let\u2019s look at an example of calculating velocity without removing sales spikes.<\/p>\n\n\n\n<p>Let us say we are looking at a product with an average velocity of 100 units\/day, but that <strong>sold an additional 4,000 units in the last 90 Days during Prime Day.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">180 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">22,000 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">122.2 units\/day<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">90 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">13,000 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">144.4 units\/day<\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Prime Day +4,000 units<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">60 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">6,000 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">100 units\/day<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">30 Day<\/td><td class=\"has-text-align-center\" data-align=\"center\">3,000 units<\/td><td class=\"has-text-align-center\" data-align=\"center\">100 units\/day<\/td><\/tr><tr><th class=\"has-text-align-center\" data-align=\"center\">AVERAGE VELOCITY<\/th><th class=\"has-text-align-center\" data-align=\"center\">116.7 units\/day<\/th><\/tr><tr><th class=\"has-text-align-center\" data-align=\"center\">TWO MONTH ORDER<\/th><th class=\"has-text-align-center\" data-align=\"center\">7,002 units<\/th><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>You\u2019d be <strong>over-ordering by 1002 units<\/strong>. If this product cost you $5 per unit, <strong>that would be $5,010 in tied-up capital<\/strong> not working for you for two months.<\/p>\n\n\n\n<p>For a business so subject to cash flow challenges, $5,010 in tied-up capital can be costly.<\/p>\n\n\n\n<p>And if we can take that $5,010 and invest it into another product that gets us a <strong>200% ROI<\/strong>, the <strong>real loss in missed opportunity amounts to $10,020<\/strong>.<\/p>\n\n\n\n<p>Lost opportunity costs are one thing and are painful enough. <strong>But if you are also paying for increased storage fees or interest on Amazon Lending loans,<\/strong> the mounting hard costs could increase those business losses considerably.<\/p>\n\n\n\n<p>So dialing in your inventory needs and really getting them right is extremely important in your business. <strong>These missteps could be death by paper cuts or, in extreme examples, death by machete.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Are_You_Actually_Doing_Inventory_Planning\"><\/span>Are You Actually Doing Inventory <em>Planning<\/em>?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>We often think of<\/strong> forecasting on too basic a level, looking at only the past to forecast the future. <strong>If we don\u2019t factor <em>planning<\/em> into the equation, we could end up in missed opportunities.<\/strong><\/p>\n\n\n\n<p>Forecasting needs to take a broader view.<\/p>\n\n\n\n<p>To accurately predict your inventory needs, <strong>looking at things like Lightning Deals, ranking promotions and email marketing offers,<\/strong> and other sales events is a key factor in<strong> your inventory planning<\/strong>. <\/p>\n\n\n\n<p>Any tool or system you have in place for determining inventory orders must include this as a factor, or it could be completely dropped out of the equation until it\u2019s too late.<\/p>\n\n\n\n<p>So if you\u2019re using software or a system that doesn\u2019t allow for percentage or unit increases based on your inventory planning, not just forecasting from past historical data, you\u2019ll have to do all of your additional calculations in your head.<\/p>\n\n\n\n<p><strong>Or, even worse, forgetting until too late\u2026<\/strong> rendering your inventory management system more of a liability to your business than an asset.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/blog.pixelfy.me\/storage\/app\/uploads\/public\/5e6\/ac0\/48b\/5e6ac048b018f788895698.png\" alt=\"Stock Outs\"\/><\/figure>\n<\/div>\n\n\n<div style=\"text-align: center;\"><\/div>\n\n\n\n<center><small><strong>Learn more about this tool<br><a href=\"https:\/\/www.sostocked.com\/sostocked-59-mo-for-lifedou12dl8?affiliate_id=2156526\" target=\"_blank\" rel=\"noopener\">here<\/a><br><\/strong><\/small><\/center>\n\n\n\n<p>Including all sales planning per SKU level allows you to dial in your projections to develop a more precise reorder forecast, so you can avoid expensive emergency air freight or <strong>canceling Lightning Deals or promotions due to improper planning<\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Are_You_OverUnder_Calculating_Your_Express_Freight\"><\/span>Are You Over\/Under Calculating Your Express Freight?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Hey, we get it. Sometimes you <em>have to<\/em> air freight an order. <strong>But often, you only need to send a partial order by air to avoid stocking out<\/strong>.<\/p>\n\n\n\n<p><strong>Stocking out can be expensive<\/strong> &#8211; from the lost sales when out of stock to the time, money, and extra inventory it takes to re-rank. For all these reasons, you will elect to pay an arm and a leg not to run out.<\/p>\n\n\n\n<p><strong>But how <em>much<\/em> should you send by air? And how much by sea?<\/strong><\/p>\n\n\n\n<p>Well, you <em>shouldn\u2019t<\/em> just send in as much as you\u2019ll need before you run out based on current velocity. <strong>You should be adding a buffer stock into that equation too in case anything goes wrong with your sea freight<\/strong>. Because it would be a real bummer to pay for express shipping, only to run out again because your sea freight got held up in customs.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/blog.pixelfy.me\/storage\/app\/uploads\/public\/5e6\/aca\/f72\/5e6acaf72abee898154336.png\" alt=\"Stock Outs\"\/><\/figure>\n<\/div>\n\n\n<div style=\"text-align: center;\"><\/div>\n\n\n\n<center><small><strong>Learn more about this tool<br><a href=\"https:\/\/www.sostocked.com\/sostocked-59-mo-for-lifedou12dl8?affiliate_id=2156526\" target=\"_blank\" rel=\"noopener\">here<\/a><br><\/strong><\/small><\/center>\n\n\n\n<p>And it almost goes without saying that <strong>factoring your sales spikes and stock outs into the equation is another key element<\/strong> to calculating a correct express order.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Are_Your_Lead_Times_ACTUALLY_Accurate\"><\/span>Are Your Lead Times ACTUALLY Accurate?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Losing track of inventory timelines can become a common way of stocking out<\/strong>. Oftentimes, we started working with our supplier years ago when they wanted to impress us, and their priorities were maybe a little bit different, or their systems have changed.<\/p>\n\n\n\n<p><strong>Over time, it can happen that lead times change<\/strong>. Yours may have changed already, and you just haven\u2019t been told.<\/p>\n\n\n\n<p>The supplier himself may not even realize that it has changed. <strong>But, gradually, it sometimes happens that your lead time has extended out 5, 10, and even 15 days longer than you expect<\/strong>.<\/p>\n\n\n\n<p>If you\u2019ve been running out of inventory, thinking it was your lack of foresight or that your sales velocity was higher than you predicted, it can at times be found <strong>it\u2019s just a longer lead time from your supplier while you\u2019re still operating off the old one.<\/strong><\/p>\n\n\n\n<p>It becomes valuable to <strong>reassess to last 3-5 orders from your supplier to see how long they generally have taken to get your shipments out the door<\/strong>. This may be investigated as crudely as, when you wired the payment for the order to when they emailed you that it was ready to ship. You may be surprised to see what you learn.<\/p>\n\n\n\n<p>From that audit, you\u2019ll be able to see if you have to adjust your lead time accordingly to order sooner than you have been. <strong>Or better yet, dig in to discover why the shipments have been running late<\/strong>.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/blog.pixelfy.me\/storage\/app\/uploads\/public\/5e6\/acc\/547\/5e6acc547c2ad725042383.png\" alt=\"Stock Outs\"\/><\/figure>\n<\/div>\n\n\n<div style=\"text-align: center;\"><\/div>\n\n\n\n<center><small><strong>Learn more about this tool<br><a href=\"https:\/\/www.sostocked.com\/sostocked-59-mo-for-lifedou12dl8?affiliate_id=2156526\" target=\"_blank\" rel=\"noopener\">here<\/a><br><\/strong><\/small><\/center>\n\n\n\n<p>It may be that their raw materials provider runs late in delivering materials, and all you need to do is to order a bunch of raw materials upfront to speed up your lead time.<\/p>\n\n\n\n<p>Or your accountant isn\u2019t paying them immediately but waiting until the end of the week. Fire him! Just kidding, simply enact a policy that payment to suppliers needs to be immediate same-day to avoid delays.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Are_You_Blindly_Following_a_Forecasting_Algorithm\"><\/span>Are You Blindly Following a Forecasting Algorithm?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The more knowledge you have, the more control you have over your business. So <strong>blindly trusting forecasting software that doesn\u2019t (or won\u2019t) reveal to you their \u201cmagic\u201d forecasting algorithm actually removes a level of control from your business<\/strong>.<\/p>\n\n\n\n<p>When using algorithms, <strong>you should, first and foremost, understand and trust the data going into the algorithm<\/strong>.<\/p>\n\n\n\n<p><b>You won&#8217;t readily trust if you can\u2019t break down the numbers into their component parts, sales, spikes, stockouts, Lightning Deals, seasonality (o<\/b><strong>r how they calculate these!)<\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/blog.pixelfy.me\/storage\/app\/uploads\/public\/5e6\/ace\/a12\/5e6acea12692a914630849.png\" alt=\"Stock Outs\"\/><\/figure>\n\n\n\n<div style=\"text-align: center;\"><\/div>\n\n\n\n<center><small><strong>Learn more about this tool<br><a href=\"https:\/\/www.sostocked.com\/sostocked-59-mo-for-lifedou12dl8?affiliate_id=2156526\" target=\"_blank\" rel=\"noopener\">here<\/a><br><\/strong><\/small><\/center>\n\n\n\n<p><strong>This is one main reason<\/strong> most sellers who start with an inventory management software, ditch it shortly after, they don\u2019t trust the numbers. (<strong>The other is that they can\u2019t manipulate <em>ALL<\/em> of the data points.<\/strong>)<\/p>\n\n\n\n<p>If you can\u2019t recreate the results fed back to you, if you can follow the numbers, you\u2019re not likely to trust the recommendations that are spit out to you.<\/p>\n\n\n\n<p>We don\u2019t know about you, but running on blind faith was never part of our business plan.<\/p>\n\n\n\n<p>Inventory management is not mysterious. It shouldn\u2019t be made to be. But that\u2019s what some software companies do to make you feel they know something you don\u2019t.<\/p>\n\n\n\n<p>It\u2019s just numbers. And <b>if you\u2019re going to be able to trust those numbers, you need to know what they are<\/b>. So be wary of any software that doesn\u2019t give you full visibility in the numbers within their forecast calculation.<\/p>\n\n\n\n<p><strong>You know your business better than an algorithm does<\/strong>. Don\u2019t let anyone make you believe otherwise.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Are_You_Spending_TOO_MUCH_TimeMoney_on_Forecasting\"><\/span>Are You Spending TOO MUCH Time\/Money on Forecasting?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Doing All the Work Yourself?<\/strong><\/p>\n\n\n\n<p>If you, like most sellers, still run your own inventory management and forecasting via Excel, chances are, you\u2019re downloading a half dozen reports, uploading them into a tricked-out spreadsheet, and analyzing, estimating, tweaking (guessing\u2026) at the calculations, having to remember that you stocked out last month, had Prime Day the month before that, and had an odd, unexplainable sales spike a month earlier&#8230;<\/p>\n\n\n\n<p><strong>How much time do you spend on inventory management?<\/strong> Do you feel it&#8217;s too much? <strong>Do you ever wonder if there were a quicker way to analyze your data?<\/strong><\/p>\n\n\n\n<p>How much money are you losing in importing and tweaking data that you could be spending on things that make you more money, like product development?<\/p>\n\n\n\n<p>How much is your time worth? Lost opportunity cost factors in just the time invested alone.<\/p>\n\n\n\n<p><strong>Paying a VA?<\/strong><\/p>\n\n\n\n<p>And what about <strong>the hard costs of paying a VA\u2019s salary<\/strong> to do this? It may not be much, but it adds up. <strong>And then there is user error that factors in&#8230;<\/strong><\/p>\n\n\n\n<p>Find out more about Amazon sales on our <a href=\"https:\/\/pixelfy.me\/blog\/\">blog<\/a>. <\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_Summary%E2%80%A6\"><\/span>In Summary&#8230;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If you aren\u2019t accounting for buffer stock, sales spikes, stock-outs &amp; Lightning Deals, <strong>if you\u2019re spending too much time buried in spreadsheets<\/strong> &#8211; <strong>or blindly following algorithms<\/strong> &#8211; if you\u2019re over or under calculating your express freights, <strong>you\u2019re bleeding money<\/strong>.<\/p>\n\n\n\n<p><strong>Becoming<\/strong> an <strong>expert in inventory management involves a lot of factors<\/strong>. These factors are important. <strong>But don\u2019t let anyone let you think they are above your pay grade by making you think they have the \u201csecret\u201d algorithm<\/strong> that will solve all your problems. They don\u2019t.<\/p>\n\n\n\n<p>The above are some of the top reasons many businesses currently struggle with inventory management. <strong>It is these short-sided omissions that are the achilles heel of forecasting.<\/strong><\/p>\n\n\n\n<p>But these are all things you can get a handle on. These are all things that can be built into a spreadsheet and calculated and accounted for.<\/p>\n\n\n\n<p>And it is a very rare <a href=\"https:\/\/www.sostocked.com\/sostocked-59-mo-for-lifedou12dl8?affiliate_id=2156526\" target=\"_blank\" rel=\"noopener\">forecasting software that can do all of these things<\/a>.<\/p>\n\n\n\n<p>But whether you use <a href=\"https:\/\/www.sostocked.com\/sostocked-59-mo-for-lifedou12dl8?affiliate_id=2156526\" target=\"_blank\" rel=\"noopener\">software<\/a> or go it the Excel sheets way, <strong>you need to be sure these things are taken into account, especially if you intend to scale<\/strong>.<\/p>\n\n\n\n<p>Otherwise, your inventory (mis)management can be your downfall. Don\u2019t let it be the golden noose around your neck. <strong>Adopt these vital inventory techniques and keep more money in your pocket<\/strong>.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">BI-LINE<\/h4>\n\n\n\n<p><strong>Chelsea Cohen is an Amazon seller, consultant &amp; co-founder of <a href=\"https:\/\/www.sostocked.com\/sostocked-59-mo-for-lifedou12dl8?affiliate_id=2156526\" target=\"_blank\" rel=\"noopener\">SoStocked.com<\/a>, the first &amp; only fully-customizable inventory management software<\/strong> for Amazon sellers. <\/p>\n\n\n\n<p>She has been a featured speaker at the Amazing.com Seller Summit &amp; Seller Events and on podcasts such as AM\/PM Podcast, Seller Stories with Jungle Scout &amp; Amazon Seller Secrets Revealed.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Are you confused about the costly inventory forecasting mistakes and want to minimize making them, then go through this in-depth and detailed guide &#8230;<\/p>\n","protected":false},"author":1,"featured_media":376,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"footnotes":""},"categories":[1],"tags":[417,418,419,420,421,422],"class_list":["post-375","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-are-you-making-these-costly-inventory-forecasting-mistakes","tag-costly-inventory-forecasting-mistakes","tag-are-you-using-false-zero-alerts","tag-are-you-properly-accounting-for-stock-outs-or-sales-spikes","tag-are-you-actually-doing-inventory-planning","tag-are-you-over-under-calculating-your-express-freight"],"acf":[],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/pixelfy.me\/blog\/wp-json\/wp\/v2\/posts\/375","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pixelfy.me\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pixelfy.me\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pixelfy.me\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/pixelfy.me\/blog\/wp-json\/wp\/v2\/comments?post=375"}],"version-history":[{"count":9,"href":"https:\/\/pixelfy.me\/blog\/wp-json\/wp\/v2\/posts\/375\/revisions"}],"predecessor-version":[{"id":2070,"href":"https:\/\/pixelfy.me\/blog\/wp-json\/wp\/v2\/posts\/375\/revisions\/2070"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pixelfy.me\/blog\/wp-json\/wp\/v2\/media\/376"}],"wp:attachment":[{"href":"https:\/\/pixelfy.me\/blog\/wp-json\/wp\/v2\/media?parent=375"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pixelfy.me\/blog\/wp-json\/wp\/v2\/categories?post=375"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pixelfy.me\/blog\/wp-json\/wp\/v2\/tags?post=375"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}