Forecasting is one of the core features of Inventory Planner. The sales forecast drives your recommendations for replenishment.
Summary
Forecasting methods
Account-wide forecasting settings
Custom forecast settings (by variant)
The "Use stockouts history" setting
Forecasting methods
Forecast settings can set based on three different forecast methodologies:
Recent sales and trends
Last sales
Seasonal
Recent sales and trends
Recent sales and trends looks at recent sales and stockouts during the sales period for forecast when generating a forecast. Inventory Planner calculates sales velocity and trend based on customer orders placed during this time frame.
Note: If a variant's first sale occurs during the reporting period, then the sales velocity calculation starts with the first sale date by default. Contact the Inventory Planner team if you would like to use the "created at" date instead of the "first sold at" date.
The sales period for forecast and trend can be adjusted per variant by clicking the "i" icon under the "Details" column, clicking into the "Forecast settings" tab, and enabling "Use custom forecasting settings".
Last sales
The last sales forecasting method is best for non-seasonal products. It is based on the average sales for the last "X" number of days, where you set the number of days.
If the "Use stockouts history" setting is enabled, the forecast will only consider periods when the product had stock available to calculate the sales velocity. Here is an example of how the algorithm works if "15" is entered for last "X" days:
Look at sales and stock over the last 15 days.
If the product went out of stock during the last 15 days, extend the date range to look for the last 15 days when there was stock available to calculate the sales velocity.
If the product had no stock in the last 15 days, look at the last sale date when stock was available, then look at sales and stock from the 15 days prior to that to calculate the sales velocity.
Note: If "Use stockouts history" is enabled, sales placed during stockout periods are ignored.
Be aware of the following:
New accounts: Inventory Planner tracks stock history starting with the day you connect your platform. Since Inventory Planner cannot see past stock, it will look at the "Last sold at" date, then add sales from the prior "X" days to calculate the sales velocity. Note that if the number of days with sales in the period is less than or equal to 3, Inventory Planner will divide over 30 days by default. Contact Inventory Planner to have this amended.
Exclusions: The following are ignored when using this forecast method:
Manually inputted stockouts
Manually adjusted sales history
Trends
Seasonal
The seasonal forecast method considers the same months in prior years as the sales reference period. It's beneficial for holiday and seasonally driven items with 12+ months of history. For seasonal forecasts, sales velocity is not considered, and the trend is applied by evaluating sales over the last 12 months vs. the prior 12 months.
For example, sales from January 2018 and January 2019 impact the forecasted needs for January 2020. If today is December 31, 2019, the trend will be based on sales between January - December 2019 vs. January - December 2018.
When an item has less than 12 months of sales history, the seasonal forecasting method computes a seasonal forecast at the category level, then distributes forecasted sales to the variants. The last 2 months of sales are used to determine each variant's contribution to the total unit sales of the category. Non-replenishable and non-tracked products are excluded from this distribution.
For example, if Variant A contributed 5% of the sales units to Category Z during the period, then Variant A will receive 5% of the category's forecasted sales in upcoming months.
Default sales period for forecast
The default sales period for forecast is set for all items at the top right of the Replenishment screen. Customer orders placed during this time will be used to calculate the forecasted demand.
Account-wide forecast settings
Account-wide forecast settings can be found by going to Account > Settings > Forecast.
Custom forecast settings
There are three methods for customizing forecast settings by variant:
Catalog > Forecast settings
To customize a variant's forecast settings, you can go to Catalog > Forecast settings, then check the "Custom forecast settings" checkbox next to any item.
Replenishment > Details
You can also customize a variant's forecast settings by looking them up in the Replenishment report, clicking the Details icon, then enabling "Use custom forecast settings" in the "Forecast settings" tab.
Set custom forecast settings in bulk
Set custom forecast settings in bulk by selecting multiple items in the Replenishment report, then clicking Bulk actions > Set forecast settings.
Toggle the "Use custom forecasting settings" setting, then adjust the variants' forecast settings as desired.
Use stockouts history
Inventory Planner automatically detects when a product is out of stock starting from the moment you connect your store to Inventory Planner. Looking at stockouts helps to estimate the demand correctly.
For example, if you sell 10 units of Variant A per month on average but the product is out of stock for 1/2 of a month, the real demand for it is 20 units. Without taking stockouts into account, the forecasted demand could be too low.
Configure the "Use stockouts history" setting using the same steps as above for setting custom forecast settings. Enable this setting to adjust the forecast to include past out of stock information. Enabling this setting assumes that back orders are not accepted.
If your store allows overselling (continuing to sell an item even when it is out of stock), disable this setting. Disabling the setting ignores past stockouts, and also ensures that forecasts consider backorders during the lead time.
You can manually input past stockouts in the Edit Forecast screen:
Or by clicking the Details "i" icon and going to the "Replenishment and forecast" tab. Scroll down, then click "Past sales" to add stockouts information.
Past stockouts can also be imported using a CSV file. More information on adjusting stockouts can be found here.
Note: If you need to make additional changes to your forecast, read our article about the Edit Forecast functionality.