Inventory Forecasting Optimization Introduction

Posted by Gerry Poe


Inventory Forecasting Overview

inventory-optimization-framework-CPFR-Model.bmp

Inventory Forecasting is the first module within the Inventory Optimization suite. The full suite of modules comprising:

  • Inventory Forecasting
  • Inventory Families and Groupings
  • Inventory Optimization

Before inventory levels can be optimized, it is essential that sales forecasts are as accurate and reliable as possible. The Forecasting Module addresses this requirement by providing the tools to achieve this.

Given that the forecasting algorithms base their calculations exclusively on sales history, it is essential that the sales history (as held in the forecasting system) is an accurate reflection of the sales demand made on the company's inventory (i.e., it should include any sales lost because there was no inventory available to satisfy a demand).

The Sales Orders system outputs invoices, debit notes, credit notes and dispatch notes to the forecasting sales history. Also, Initial History Creation enables you to build the forecasting sales history using inventory movements as it's source.


Processing is broken down into sequences of setting up the system to reflect your needs. Selecting the  optimization selections best suited for inclusion, their relationships (Families and Groupings), Pareto Analysis,

Now deliver what you promised in the first section. This is the longest part of the post, so make it easy to read. Use short paragraphs, bullet lists, and bold headings to set different sections apart. 

Some common section headers include:

Step 1: Getting Started

Step 2: Do Your Background Research on…

Step 3: First Steps for…

Step 4: Analyze and Repeat

Step 5: Wrapping Up

You can use bullet-lists, numbered list, or multiple headings. Include as many steps, numbers, or bullets that will allow you to discuss your topic thoroughly. 

Inventory Forecasting from SYSPRO Learning Channel Posted by Gerald Poe on Vimeo.

Here are some pointers to make the best possible use of Inventory Forecasting:

  • Forecast Accuracy

Forecast accuracy tracks the performance of the forecast for individual items or a group of items. This enables you to measure and compare your historical forecasts against your actual sales movements, including lost sales.

  • Pareto Analysis

For the Pareto Analysis program, your selection here enables you to analyze inventory at a different level to that of the company. For example, you could analyze items by the supplier, bearing in mind that an A-class item for a particular supplier may well be a D-class item when analyzed at the stock code level.

  • Understanding the language of forecasting, Pareto Analysis and optimizing your formulas

Like many business systems we use, they are complicated. Until you unravel and understand complexities; simplification, and application may seem out of reach. Training is key to benefits.

  • In the end, transition to your conclusion

Finally, the Demand History Maintenance program presents the sales history (in both tabular and graphical format) and allows the user to create manual adjustment entries.

Faced with the daunting task of having to sort out the sales history and forecasts of a company's entire inventory, users might wonder where they should focus their attention. The Pareto Analysis program provides insight to which items are 'most important' to the company.

The analysis can be run on all inventory items or sub-sets as defined by the available options. The selected options can be saved to a 'forecasting set' for later use in Pareto Analysis and other forecasting module programs. Having analyzed their inventory using Pareto Analysis, the user can choose to manually forecast all 'A class' items while using the Batch Forecasting program to forecast the remainder.

Tags: Inventory Forecasting, Food & Beverage, MRP, material requirements planning

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