Optimize Stocks, Reduce Costs, Increase Profit, and Customer Loyalty
Reduce The Excessive Stock Levels and Win The Competition
Demand forecasting is one of the main issues of supply chains. It is aimed to optimize stocks, reduce costs, increase sales, profit, and customer loyalty.
Excessive stocks (overstock) and out-of-stock (stockouts) are very serious problems for retailers. Excessive stock levels can cause revenue loss because of company capital bound to stock surplus. Excess inventory can also lead to increased storage, labor, and insurance costs, and quality reduction and degradation depending on the type of the product. Out-of-stock products can result in lost for sales, reduced customer satisfaction and store loyalty. If customers cannot find products at the shelves that they are looking for, they might shift to another competitor or buy substitute items. Especially at middle and low level segments, customer’s loyalty is quite difficult for retailers.
Since competition is increasing day by day among retailers at the market, companies are focusing more predictive analytics techniques in order to decrease their costs, and increase their productivity and profit.
Sales and customer loss is a critical problem for retailers. Considering competition and financial constraints in retail industry, it is very crucial to have an accurate demand forecasting and inventory control system for management of effective operations. Supply chain operations are cost oriented and retailers need to optimize their stocks to carry less financial risks. It seems that retail industry will face more competition in future. Therefore, the usage of technological tools and predictive methods is becoming more popular and necessary for retailers.
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