Forecasting Inventory | Cloudy With a Chance of Ordering
You've done it; you've gone out on a limb, taken a risk, and made the leap into the world of successfully managing inventory with electronic inventory management software. Not only that, but you've chosen the system that you think is best for you, your employees, and your restaurant. All of this is something worth commending, especially given the breadth of options currently on the market when it comes to this kind of software. Now you've positioned yourself in a place where your potential for profit has expanded significantly, and in a way that is relatively easy to implement and maintain.
The thing is that isn't all you've done. No, you've now firmly established another opportunity, one we'd be willing to bet you didn't even consider initially, but one that you're going to want to pay attention to now. That opportunity is something known as forecasting inventory. In short, the idea is that through forecasting inventory, you will be able to essentially predict what you will need to order before it comes time to check your stock and place the order. We'll spend a little while on exactly how you might do that in a second, but first, let's get some important stuff out of the way.
With this article, we're looking to both introduce the concept of forecasting inventory to you and demonstrate to you how you can use your inventory management software to make that idea a reality. For this article, we're going to stick to a software example that we at Hubworks are familiar with - our very own Zip Inventory. It is our hope that you'll finish with a better understanding of this concept, and be able to get started employing it within your restaurant in the immediate future.
What Exactly Is Forecasting Inventory?
Forecasting inventory, as we mentioned, is more or less the ability to predict what you will need to order, and how much, based on previous information, before it comes time to do the inventory count and place the order. This predictive technique is not only incredibly convenient and timesaving but also opens up the door for more control over your inventory and order as well. In the next section, we're going to discuss how you would use this existing data to carry out this technique, but for the moment just know that it isn't nearly as complicated as it might appear to be on the surface. It is infinitely easier, and a fair bit quicker than you might expect, making it not only useful but convenient as well.
What Data Is Used in Forecasting Inventory?
Now, this is the question you're probably asking yourself. It's a valid one, and one that's worth taking a second to discuss so that, going forward, you have a far better grasp of the kinds of data we're dealing with.
In short, what you're looking to do is take information on ordering and inventory from previous ordering cycles(whether they be weekly, bi-weekly, monthly, etc.) and use that as the foundation from which you will build your inventory forecast. You aren't just looking at the very broad numbers, though; you're going to want to assess each item, how many you bought, and how many were left over. Though it may appear time-consuming, it is an awful lot quicker than you might expect, so long as you have the right tools for the job at hand.
How Is This Data Used?
Now that we know what kinds of numbers we're working with, it's time to discuss how a proper inventory management system would make the most out of them and produce some trends you can work with to make your inventory forecast.
With Zip Inventory, there are several filters, as well as a search option, that will make it incredibly simple to find the products you're looking for without wasting precious time flipping through a paper list. Once you have the information for the product or product category you're looking for, you're going to want to run the analytic features of whichever app you're using (whether it is ours or not).
In essence, you're looking to see the averages for each product over the course of a cycle, both the average bought and averaged used. Once you have this information, the rest of the forecasting inventory process is cake. All you need to do is compare the two numbers, account for the difference between what you ordered and what you used, and then use your judgment to decide whether you want to order only what you use on average, a bit more, or even a bit less. Once you've done that, you should have a pretty clear picture of what you should be ordering whenever you place an order.
There you have it, our (very) brief rundown of how to employ your inventory management software for forecasting inventory for your business. These forecasts really can do wonders when it comes to helping save you money by cutting down on excessive ordering, and this forecasting inventory method is a wonderful first step toward gaining proper control over your inventory and ordering processes. If you're interested in learning more about this topic, keep your eyes peeled on our blog and check out our How to Choose the Best Inventory Control Software for Small Businesses article, also on the Hubworks Blog!