2 Secrets to Manage Slow Demand Products that Make You Money
Slow Demand products makeup 35-40% of most retailer assortments and cannot be simply eliminated. In order to profitably sail the Slow Demand Product seas, you need to be equipped with a proper forecasting engine. By providing a forecasting engine that utilizes the correct algorithm for slow demand products, you have taken an important step in your destination to increase demand forecasting accuracy.
Demand Forecasting: The Boat Must be Functional?
More than 85% of the demand forecasting systems in use today are only using 2 forecast algorithms and a collection of ‘models’. Many software companies claim to have ‘hundreds’ of algorithms when in fact they have only one or two algorithms and several models. Legacy systems often don’t have algorithms for intermittent and slow demand product. If you want to get an optimized inventory, you need accurate demand forecast. Accurate demand forecast can only be reached with updated, modern demand forecast solutions and fortunately they cost significantly less money.
Inventory Management Success requires accurate Demand Forecast
“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.” Jimmy Dean
Stock Model Factors
The core problem is this: forecasting algorithms are deterministic. In other words, if you put X, Y, and Z into a forecasting algorithm, then you’ll always get the same result. The result of a demand-driven forecast is wholly divorced from planning inputs. Otherwise, why bother forecasting at all. The wrong algorithm in your forecasting engine will always deliver bad results.
Ship Shape
The key to managing slow demand products is to focus on a combination of service and demand forecast accuracy across a wider selection of periods and to avoid common pitfalls by using the proper algorithms in your forecasting engine. Make sure your boat is fully functional: Contact Us
for a free consultation about your forecast accuracy and inventory management opportunities, or request a free demo and see how you can fix your engines and safely reach your destination.
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