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Quarterly Sales Data & Inventory: Order What You're Going to Sell

At CapRock Services, we assist all our clients in optimizing their businesses. When running a small operation there is little room for error, and efficiency is absolutely critical. Optimization of inventory and supply chains allows a small business to be nimble and maximize sales, while keeping excess spending low.


Streamlining Inventory

Sales data serves several useful functions. First among these is inventory optimization. By reviewing sales information, small business owners can customize their inventory to meet customer demand. By doing so, they remove unneeded under-performing products and keep products with a high sales ratio in stock.

Unpopular products are ones that cause added expenses by taking up shelf space that could be used by higher-performing goods. They also often end up on clearance for far less than their initial investment causing them to sell at a loss.

With a streamlined inventory, a small business owner maximizes sales, reduces losses on unneeded stock, and increases profit margins by being able to meet customer demand.     

Inventory Planning/Forecasting

When reviewing sales data, along with making sure the current supply chain planning is meeting current customer demands, there must also be planning for future demands.

Demand planning not only keeps a business engaged with their customers but also allows them to predict future hot sellers based on current sales trends. By being prepared in advance for increasing demand, a business avoids product shortages that affect overall quarter and yearly profits.    

Proper Forecasting Techniques

There are several different techniques for forecasting future sales. Two of the most common are Quantitative Forecasting and Qualitative Forecasting. They differ by what aspect of sales data they focus on.

·       Quantitative Forecasting: is mathematical and looks at past sales data and trends. It can look at quarterly data sets to review current trends or decades worth of information to create a detailed picture of the consumer market and how it has changed. Quantitative data is very useful because it presents hard data of current customer behavior concerning what’s selling and what's not selling. However, its inherent flaw is that it is entirely data driven and cannot predict random occurrences such as seasonality or a new trend. People (and, by extension, the market) can be unpredictable at times.     

·       Qualitative Forecasting: focuses on the human element of sales. Unlike quantitative forecasting, qualitative forecasting focuses on probability. These factors include reviewing market data to predict market changes and future consumer trends. While less concrete in terms of data, in the hands of a business owner who truly understands their customers, qualitative forecasting can be a powerful tool.   

Inventory Management

Inventory management is commonly done by one of two methods of review, largely depending on how quickly inventory moves. These are continuous review or periodic review.   

·       Continuous Review: is best used in businesses with fast moving or popular products. This method of review is ongoing and stock is replenished when it drops below a certain inventory threshold. This avoids product shortages or running out of stock.  

·       Periodic Review: is based on set review periods and stock is ordered at this time when overall inventory is reviewed. For businesses with slower moving products and the capital to carry large amounts of stock, a periodic review is a very useful method once the supply chain has been optimized.

CapRock Services

When running a business, demand planning can be very complex. Keeping the proper amount of stock on hand and avoiding shortages of in-demand items is a key part of success. At CapRock Services, we can help you optimize your business to do just that. Please contact us today for more information.