Nothing binds your cash flow more than accidentally investing too much in inventory too early. At the same time, if you run out of a product, you run out of the ability to keep making money. It’s a tough line to walk whether you’re in sales or manufacturing, but if you understand your business cycle you can more accurately plan your inventory restocking purchases. It hardly matters whether it’s raw materials or items for resale, the demand curve you face is the primary dictator of the supplies and inventory you need on hand. That’s where demand planning software becomes invaluable. It lets you track when demand is picking up so you can increase your orders responsibly, using analytics you can count on.
What Are Analytics?
If you haven’t heard the term before, it just basically means the results of an analysis. More specifically, your analytics are the specific points of comparison used to make judgments from data. Often, they are determined organically, using machine learning to identify key factors that change in trends, then providing insights about those trends. When applied to your demand tracking, it means using data from the past to get a sense of the indicators of rising demand, and then calibrating your inventory to the signs of rising or falling demand before the effect is in full swing. The result when everything works correctly is a full inventory before things get busy and a steady sell-off as demand falls, so you don’t wind up sitting on assets that don’t sell when you could be using that capital in other ways.
The Right Predictions Require the Right Tools
Not all demand tracking and planning packages are equally reliable. In fact, there’s a clear difference between the most accurate platforms and everyone else, and that difference is the way data is collected, sorted, and used. Successful and accurate platforms combine a better algorithm for identifying key data points that indicate trends with the analysis to pick up on their patterns earlier than the competition. If you’re trying to figure out which way to go with your investment, the key is to make sure you get a look at the performance of the platform in motion, so you can see how many pieces of data play into its analytic processes. Then, you also need to look at what kind of demand it was made to predict, because there are huge differences between short and long-term trend indicators, and you need to know whether your tools are built for one of those or both.