Demand Forecasting Slow Moving Products – 7 Dos and Don’ts
Wonder What Happens Next in this Slow Moving Scene?
I call them “heartbeat” products. Every Retailer and Manufacturer has them. The slow or niche products that don’t sell every day but are still vital to your business. If you charted their sales history, it would look like a heart monitor, up one week, down the next, up and down, up and down. No gentle seasonal curves here, just jagged peaks and deep valleys. You never know week to week if you are going to sell none or a hundred. Often expensive, well-managed heartbeat products can be valuable sales drivers. Poorly managed heartbeat products can eat up your profits and burn holes in your open to buy. So how do you maximize sales and lower your inventory on these slow movers?
The 7 Dos and Don’ts of Slow Moving Products
- Don’t treat TVs like cat food – What works for cat food doesn’t work for TVs. Use a replenishment and demand-forecasting system that lets you set forecast periods, review periods, service levels and other parameters down to the product level.
- Do review multiple periods – Check demand forecast accuracy over a window of time that includes multiple periods. For slow and intermittent demand, the more sales history you use to forecast, the better your forecast will be.
- Don’t forecast by week – Weekly forecasts and reforecasts work great for things like cat food because customers buy those products regularly. But I don’t buy a TV every week, let alone the same TV twice. I bet you don’t either. TV sales look like heartbeats because there is no way to predict which week a customer will decide to buy a TV. It’s much easier to know that customers will want to buy TVs in December.
- Do embrace the heartbeat – Some demand forecasting systems try to smooth out the peaks and valleys by eliminating zero sales periods and averaging out the high demand months. This isn’t necessary. If a forecast of zero is mostly likely, let the forecast stay at zero.
- Do measure service levels – Did you have the product available to do the sales you expected?
- Don’t measure in-stock – Outs don’t necessarily mean lost sales, especially with slow and intermittent sellers. In the process of trying to be in stock, you’ll likely find yourself overstocked. If you expect to sell zero, then having zero is not really costing you any sales.
- Do bring it all together – Your inventory plan should be integrated into your replenishment solution, consistently weighing your service level and inventory goals for each product every day to get the best results.
Learn 3 things to do and 3 things to stop doing when working with slow demand products. Read: Do You Make These Mistakes with Slow Demand Products?
Does your replenishment or demand forecasting solution solution allow you to manage slow and intermittent sales products the way you should? Let us help you manage your heartbeat products and tighten the links in your chain. LEARN MORE
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Stuart graduated from Auburn University, with bachelor of science in business administration.
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