Author Archives: Gregory Hartunian

Too Much or Too Little Inventory?

Gregory Hartunian Headshot

Smart Software President Gregory Hartunian

Do you know which items have too much or too little inventory? What if you knew? How would you go about cutting overstocks while still ensuring a competitive service level? Would you be able to reduce stockouts without incurring a prohibitively expensive inventory increase? How would these changes impact service levels, costs and turns—for individual items, groups of items and overall?

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Forecasting With the Right Data

In order to reap the efficiency benefits of forecasting, you need the most accurate forecasts—forecasts built on the most appropriate historical data. Most discussions of this issue tend to focus on the merits of using demand vs. shipment history—and I’ll comment on this later. But first, let’s talk about the use of net vs. gross data.

Net vs. Gross History

Many planners are inclined to use net sales data to create their forecasts. Systems that track sales capture transactions as they occur and aggregate results into weekly or monthly periodic totals. In some cases, sales records account for returned purchases as negative sales and compute a net total. These net figures, which often mask real sales patterns, are fed into the forecasting system. The historical data used actually presents a false sense of what the customer wanted, and when they wanted it. This will carry forward into the forecast, with less than optimal results.

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