Inventory management technique #2: Demand forecasting
One reason that business owners often find themselves under or overstocked is because they don’t have a good read on the demand for their products. While you can make assumptions about seasonality, you need a much more concrete approach for deciding how you stock inventory.
Demand forecasting is when you use data—typically historical data based on sales—to analyze consumer demand for certain products. Demand forecasting can give you insights into how seasonality impacts sales, whether there are trends for certain products or sales volume, as well as other valuable information.
If your business is just starting out and you don’t have historical sales data to go off of, you can look at your industry as a whole. With this demand forecasting technique, it may also be a good idea to look at competitors with very similar business models and offerings. While it’s not ideal, it can provide you with a good starting point for managing your inventory in the months to come.