Fulfillment centers need insights just as much as executives and investors do. In the e-commerce space, there can be global operations for warehouses in one location or hundreds. Regardless of the size of the company, e-commerce forecasting can provide forecasting to organize inventory and improve a company’s reputation and revenue.
Predicting the order quantity means efficient stocking and expedited deliveries. Maintaining long-term business relationships with departments that package and ship your products – internally or externally – is beneficial for continued growth and support. The best way to do this is to communicate the forecasts to the fulfillment centers to drive results.
The importance of understanding the supply chain
Every point in the supply chain is a variable. Every facet creates accurate forecasts, from third-party logistics to an in-house fulfillment center that packs and ships goods.
A company cannot rely solely on last year’s sales figures to make a comprehensive forecast. Expenses, outliers and unexpected scenarios must be taken into account to make it robust. Passing ecommerce forecasts to your fulfillment center is critical as it can help you understand the variables in his step of the process:
- Purchasing multiple materials jeopardizes availability.
- International sellers must charge a fee to process payments.
- Overseas shipments cause delays in deliveries.
- Companies operating in your country may have higher production costs.
Fulfillment centers need to know that most revenue comes from existing customer bases – this is the basis for projecting accurate ecommerce forecasts. This grows as a company acquires new customers, creating exponential growth in the baseline for projections. Communicating this growth to fulfillment centers will increase their momentum as your e-commerce business matures.
Forecasts also help fulfillment centers become aware of your marketing strategies. This creates a more intimate relationship between execution, analytics, and marketing teams for the most effective satisfaction. This ties in with their work, such as Custom audiences are people you can convert using free methods such as email and social media marketing.
Companies can make predictions about the success of these campaigns. It’s essential to consider paid acquisition methods, such as unsolicited offers and conversion rates, based on how much your teams are investing in marketing your e-commerce.
The challenges in e-commerce forecasting for execution
Considering all of these participants equally creates more accurate data for your fulfillment centers, but it’s not just about that initial delivery of forecasts. Communication includes when adjustments are made and new data is measured. The consumer market is not impossible to predict, but the only constant predictors they can rely on are fluctuations.
Sharing this information can help fulfillment centers prepare for dips and spikes in sales and inventory, but it’s sometimes hard to adapt. However, it may become more common as every business becomes aware of how e-commerce forecasting can help improve fulfillment center productivity. Fulfillment centers can adapt by changing recruiting methods or implementing updated storage solutions based on these forecasts.
Demand forecasting will be the centerpiece of these adjustments as the different variations describe different business results:
- Passive Question: Using past sales to predict future demand
- Active question: Using the competitive environment and production rate to forecast demand and make growth plans
- Long-term: Focused on a long period of time, usually more than a year, to get a full picture of seasonal patterns and output
- Short-term: Focusing on a single day or small window of time, such as a vacation
- Macro and micro: Analyzes outside forces that could potentially disrupt trading, using a micro or macro lens depending on the company’s objectives
- Internal company: Analyzes internal assets to see if they can keep pace with demand, including staffing needs
Companies can tell their external or internal fulfillment centers that there will be a sharp increase in inventory. This could enable them to meet that challenge by implementing new systems such as automated warehouse picking or more convenient order management software to streamline inventory management.
Another challenge is meeting the forecast. Developing it can take some time as market research takes place and experts make projections based on that insight. In the meantime, fulfillment centers that may become dependent on these projections to predict order quantities can wait in limbo while it is perfected.
Imperfect, rushed or incomplete forecasts can diminish the boom forecasts usually offered to fulfillment centers and reduce inventory costs. So many available fulfillment centers have to juggle this, especially if they house multiple e-commerce entities.
How will the forecasted order quantity help your fulfillment center?
Ecommerce forecasts can help fulfillment centers prepare for the busiest seasons – for some it’s related to holidays and for others it’s tied to trends. They should be comprehensive, usually more than the average number of units or a simple percentage increase over the previous year. What happens when a celebrity influencer stops approving your product and that impacts sales — how will your forecast reflect this hurdle so that fulfillment centers know how to acclimate?
A forecast also provides details about promotions, sales, and event fluctuations that may affect the predicted order quantity. Depending on the scope, all estimates should be developed gradually right after the previous sales period. They must consider everything from competition to season, taking into account the type of products and market currently available to them.
Fulfillment centers value forecasts that clearly outline their business goals and standards, so they know inventory specifications and what they can do to maintain a relationship of trust. Whether a third party or not, they have as much, if not more, effect on customers than the company itself.
Your fulfillment center will appreciate it if you communicate your inventory needs and expectations. It will help them organize and comply with contractual agreements, especially since they navigating an unprecedented increase in demand for e-commerce fulfillment responsibilities. Better communication equals better organization, which leads to faster shipping and better customer satisfaction.
It will also ensure accountability across sectors. Inconsistent data is a significant problem in supply chains as products exchange countless hands. Communicating expectations with fulfillment centers allows them to report accurate information because it came from you and not a third party. It’s another series of checks and balances to ensure that each item reaches its destination.
E-commerce forecasting for fulfillment centers
Creating a business that will survive in a sea of many means communicating your ecommerce forecasts to fulfillment centers. Improve customer loyalty by creating a solid foundation for forecasting. You can reduce financial risk because everyone is on the same page when it comes to sales expectations.
This creates strong business relationships, which is better for the bottom line and for the customer receiving the package.