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Understanding what your customers want is the key to effective inventory management. That requires forecasting, and according to Jon Schreibfeder, forecasting is not necessarily difficult. "You need to be organized, and you need to take a focused approach," Schreibfeder, author of Achieving Effective Inventory Management, says. And the more time you spend, the more money you can make, he says. "It's probably the most effective thing you can do to increase the profitability of your company."
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While supply and lead time uncertainty continues in many channels, Schreibfeder tells MDM in the recent article, Inventory Management a Top Priority, that distributors are indeed placing greater emphasis on determining when and how much to buy. "Scientific wild guessing" – often used in good times – is not as common these days. "We're seeing people question every large purchase and really evaluating the need," he says.
To forecast demand more effectively in a volatile time, many distributors are shortening the past history timeframe they are using to plan for future purchases, Schreibfeder says. And be sure to incorporate accurate data from the marketplace, he says. This requires training salespeople to ask the right questions when collecting information from current and potential customers, and evaluating the sources of that information.