Supply Chain Warehouse Analytics

Inventory Planning: Forecasting During Uncertainty

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Chris Elliott, Consulting Manager, Supply Chain
Chris Elliott, Consulting Manager, Supply Chain

Helping companies improve their supply chains to drive greater business value through efficiency and productivity

COVID-19 has unleashed unprecedented consumer demand and exposed fractures in the just-in-time supply chain model.

In the span of just a few months, your supply chain may have changed drastically. Supplier shutdowns in China. Increased shipping demands. Decreased working capital. These evolving conditions impact your go-forward inventory strategy.

Forecasting inventory requirements have always included a mix of past trends, sound predictions, and supplier relationships. But the uncertainties we are facing right now make this process more challenging. This includes

  • Evolving consumer demands

  • Product availability, and

  • Predictable transportation

Let's look at these inputs and how they may impact inventory planning.  

Uncertainties in Consumer Demand

Consumer demand is on a roller coaster and the ride doesn’t seem to be slowing down soon.

Shelter at home requirements have led consumers to stock-up on food while alcoholic beverages are seeing massive sales spikes. Online shoppers are buying bread machines, household supplies, and fitness goods. Other categories are seeing sales plummet, like luggage and store fixtures.

How do you predict consumer demand moving forward?

Start with the data. You do want to keep in mind that most of the peaks and valleys you may be seeing right now should be viewed as outliers. While you may need to adapt to meet current demand, you might not want to consider these outliers in your long-term planning strategy.

Be aware of the trends happening outside of what your customers are ordering just from you. The coronavirus could impact summer vacation plans. How does that impact your business?

The best approach is to understand past trends while evaluating each category to gauge whether a spike is an anomaly, and then make go-forward decisions for near-term and long-term forecasting. 

See and Adapt

The information your warehouse generates has never been more critical. See how the right data visualizations help you manage the tightrope of supply and demand.


Supplier Uncertainty

While some items in your warehouse might need higher inventory stocking levels, you may need to diversify your supply sourcing strategy to meet demand and service level agreements.

Your current suppliers may be able to help you with some creative solutions. Here’s an example of how:

Your supplier may be able to repackage a 25 lb restaurant-size sack of flour to 5-pound sacks designed for general consumers.

Other items, like Personal Protective Equipment (PPE), have global supply chains that could see continued disruptions as countries scramble to ensure that medical personnel have the equipment they need. 

Communication is key to helping you manage your supplier relationships. Find out if your suppliers have the resources they need to fill your orders. You may need to be prepared to discuss increasing order lead times or changing of the payment terms to help your suppliers ensure they are getting the resources they need to fulfill orders.

Transportation Disruption

Shipping and transport times are another key factor in determining when you’ll have the inventory in your warehouse to meet customer demand. From port issues to internal transportation changes, you may need to revise forecasts daily to better manage lead times from transportation vendors.

Open, frequent communications help you manage your transportation partners. This transparent communication gives you visibility into disruptions and keeps a channel open to ensure your partners understand your priorities, and where needs are and are not being met.

You may also want to evaluate your transportation network. While you may not have capacity to perform a full network analysis, there are some reviews that can be done on inventory and SKU profiles.

This information could provide the transportation team with insights on what items are needed in key facilities. These insights can then be summarized so that key decision makers within the business can get a bird's eye view of what the company is currently facing.

Analyze and Adapt

Companies that analyze and adapt their inventories will have a far easier time adjusting to the new reality that faces us in the future.

While no one can accurately predict the future, with the right analysis and technology you can create deeper insights that will help you adapt to changing market demands.


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