For a company sourcing products overseas, inventory planning is more complicated than checking what is currently sitting in the warehouse.
Products may be in production at a supplier, loaded onto a container, crossing the ocean, sitting at a port or already committed to a customer before they ever arrive.
At the same time, purchasing teams have to decide what to order today based on demand that may not materialize for several months.
Order too little and you risk stockouts, delayed customer orders and lost sales. Order too much and valuable cash becomes tied up in inventory that could sit in a warehouse for months.
This is why inventory forecasting for importers requires a different approach from traditional inventory management.
Effective forecasting combines what you have today with what is coming, what has already been sold and what customers are likely to need next.
In This Article
- Why Inventory Forecasting Is Different for Importers
- Understanding Your True Inventory Position
- What an Inventory Forecast Should Include
- How Forecasting Prevents Stockouts and Overstocking
- Why Spreadsheet Forecasting Becomes Difficult
- How Container Tracking Improves Inventory Planning
- Turning Forecasts Into Better Purchasing Decisions
- How VISCO Helps Importers Forecast Inventory
- Frequently Asked Questions
Why Inventory Forecasting Is Different for Importers
A domestic distributor may be able to replenish an item in days.
A company purchasing from an overseas factory may need to account for production schedules, booking availability, ocean transit, customs clearance, inland transportation and warehouse receiving before inventory becomes available for sale.
That creates a much longer planning horizon.
A product that appears adequately stocked today could become unavailable two months from now if there is nothing scheduled to replace the inventory being sold.
The opposite problem can happen just as easily. A purchasing manager may see declining warehouse inventory and place another order without realizing that several months of additional supply is already in production or on the water.
Good inventory planning therefore requires visibility beyond the warehouse.
Understanding Your True Inventory Position
One of the most important concepts in import inventory management is the difference between inventory on hand and your inventory position.
Inventory on hand tells you what is physically available in your warehouse right now.
Your inventory position is much broader.
It may include:
- Inventory currently available in the warehouse
- Inventory already allocated to customer orders
- Goods currently in production
- Open purchase orders with suppliers
- Inventory loaded into containers
- Goods currently in transit
- Expected arrival dates
- Open sales orders
- Future customer commitments
- Historical sales and expected demand
Looking at these elements together gives purchasing, logistics and sales teams a much more realistic picture of future availability.
For example, having 5,000 units in stock may look healthy until you discover that 4,000 units are already committed to open customer orders.
Likewise, having only 1,000 units in the warehouse may not be a problem if another 8,000 units are arriving next week.
What Should an Inventory Forecast Include?
An effective inventory forecasting system should combine inbound supply, outbound demand and timing.
1. Current Inventory
The starting point is the quantity physically available today.
Ideally, users should also be able to identify inventory by warehouse, lot, product or other relevant criteria instead of relying on one company-wide number.
2. Open Purchase Orders
A purchase order represents future supply, but not all open POs are equal.
Some products may still be in production while others are ready to ship. Expected production and departure dates help determine when that inventory can realistically become available.
3. Inventory in Transit
For companies purchasing overseas, inventory on the water can represent a substantial portion of the total inventory position.
Connecting inventory records with shipment information allows purchasing teams to see not only that more inventory is coming, but also when it is expected to arrive.
This is where container tracking software becomes an important part of inventory planning.
4. Inventory Allocated to Customers
Inventory should not necessarily be considered available simply because it exists.
If incoming or warehouse inventory has already been allocated to a sales order, the forecasting system should recognize that commitment.
This prevents the same inventory from effectively being counted twice.
5. Open Sales Orders
Known customer demand should be incorporated into future inventory calculations.
By comparing incoming supply against existing sales commitments, teams can identify potential shortages before they affect customers.
6. Historical Sales
Historical sales provide another important layer.
A company might analyze average monthly sales over the previous three, six or twelve months, compare current sales with the previous year or evaluate seasonal trends.
The objective is not simply to know what was sold in the past. It is to estimate how quickly available and incoming inventory is likely to be consumed.
7. Lead Times
Lead time determines how early purchasing decisions need to be made.
For imported products, lead time may include both manufacturing and transportation.
A supplier that requires six weeks of production followed by five weeks of transit requires a very different purchasing strategy from a domestic supplier capable of replenishing inventory next week.
8. Safety Stock
Forecasts can also incorporate minimum inventory levels or safety stock.
Safety stock provides a buffer against unexpected demand, production delays or transportation disruptions.
The appropriate level depends on the product, lead time, demand consistency and the company’s tolerance for stockouts.
How Forecasting Helps Prevent Both Stockouts and Overstocking
Inventory planning is ultimately a balancing act.
Companies want enough inventory to fulfill customer demand without committing unnecessary cash and warehouse space to products that are not moving.
The Cost of Too Little Inventory
Stockouts can cause more than a missed sale.
They may result in:
- Delayed customer orders
- Lost sales opportunities
- Emergency air freight
- Rush production costs
- Customer dissatisfaction
- Sales teams promising inventory that is not actually available
The Cost of Too Much Inventory
Overstocking creates a different set of problems.
Excess inventory ties up working capital, increases storage requirements and creates greater exposure to products becoming obsolete, damaged or unsellable.
For food, seafood and other time-sensitive products, the consequences can be even greater because inventory may have expiration or best-by dates.
The goal is therefore not to maximize inventory.
The goal is to maintain the right inventory at the right time.
Why Inventory Forecasting in Spreadsheets Becomes Difficult
Many growing global trade companies begin forecasting inventory in Excel.
For a small number of products and shipments, that may work.
Problems begin when the spreadsheet needs to combine information from multiple systems and multiple people.
Purchasing may have one spreadsheet for open POs. Logistics has another for containers. Sales has its own list of customer commitments. Accounting has cost information in QuickBooks.
Someone then has to manually assemble that information into a forecast.
Even if the formulas are correct, the data may already be outdated by the time the spreadsheet is finished.
Common problems include:
- Duplicate data entry
- Outdated shipment ETAs
- Different departments using different inventory numbers
- Incoming inventory being overlooked
- Allocated inventory being counted as available
- Purchase orders being placed using incomplete information
- Difficulty forecasting across hundreds or thousands of SKUs
The real advantage of centralized inventory visibility is that purchasing decisions can be made from live operational data instead of periodically rebuilding the picture manually.
How Container Tracking Improves Inventory Forecasting
Inventory forecasting becomes considerably more useful when the expected availability date changes automatically with the shipment.
Imagine that a container holding one of your highest-volume products was originally scheduled to arrive on November 3.
A spreadsheet may continue forecasting that inventory as available in early November unless someone manually changes the ETA.
If real-time shipment information shows the container has been delayed until November 12, that nine-day difference could create a temporary inventory shortage.
When container tracking is connected to inventory and sales information, the delay becomes more than a logistics update.
Purchasing can see its effect on inventory availability. Sales can understand which orders may be affected. Management can make decisions based on the updated supply picture.
This is one reason shipment visibility and inventory forecasting are most valuable when they are part of the same system.
Turning Inventory Forecasts Into Better Purchasing Decisions
A useful forecast should help answer a practical question:
What should we buy, and when should we buy it?
Instead of simply displaying current inventory, an inventory planning system can compare projected demand against future supply and identify products that may require attention.
For each product, purchasing teams can evaluate:
- How much inventory is available now?
- How much has already been committed?
- How much is currently in production?
- How much is on the water?
- When is incoming inventory expected to arrive?
- How quickly has the product historically sold?
- How much demand is already scheduled?
- How long will replenishment take?
- When will inventory fall below the desired level?
Instead of reacting after inventory becomes critically low, purchasing can identify the future shortage while there is still time to act.
Forecasting Inventory Across Multiple Warehouses
Inventory planning becomes even more complicated when a company operates multiple warehouses.
A product may appear adequately stocked at the company level while one specific location is approaching a shortage.
Warehouse-level forecasting allows companies to evaluate availability by location and decide whether they should place another supplier order, transfer inventory between warehouses or change how incoming inventory is distributed.
This gives purchasing teams another option besides simply ordering more product.
The Connection Between Inventory Forecasting and Cash Flow
Inventory is not only an operational issue. It is also a financial one.
Every unnecessary purchase ties up cash.
For overseas purchases, that cash may be committed long before the product is received and sold.
Better forecasting can help companies avoid placing orders simply because warehouse inventory looks low at a particular moment.
Instead, the buyer can consider inventory already purchased, inventory currently moving through the supply chain and expected demand before committing additional capital.
Combining inventory planning with accurate landed cost information provides an even clearer picture because management can evaluate not only how much inventory is coming, but also how much capital is invested in it.
How VISCO Helps Importers Forecast Inventory
VISCO is designed specifically around the workflows of companies involved in global trade.
The system connects purchasing, inventory, shipments and sales so users can view inventory availability today and forecast how that position changes over time.
VISCO’s inventory forecasting tools can incorporate:
- Current inventory
- Open purchase orders
- Inventory in transit
- Expected shipment arrival dates
- Allocated inventory
- Open sales commitments
- Historical sales activity
- Supplier lead times
- Multiple warehouse locations
Rather than maintaining separate spreadsheets for purchasing, inventory and logistics, teams can work from the same underlying information.
VISCO’s inventory forecast provides visibility into expected product availability months into the future, helping buyers identify potential shortages and excess inventory before they become expensive problems.
The system also connects inventory planning with other parts of the import process, including automatic container tracking, landed cost calculation and accounting integrations.
From Reactive Inventory Management to Proactive Planning
The biggest advantage of inventory forecasting is not predicting demand perfectly.
No forecast can eliminate uncertainty.
The advantage is seeing problems earlier.
When purchasing teams understand what is in the warehouse, what is committed, what is in production, what is on the water and what customers are expected to buy, they can make decisions before a shortage or overstock situation becomes unavoidable.
For businesses with long international supply chains, that additional time can be extremely valuable.
Instead of asking, “How much inventory do we have?”, the better question becomes:
“What will our inventory position look like when our customers need the product?”
That is the question effective inventory forecasting should answer.
Frequently Asked Questions About Inventory Forecasting for Importers
What is inventory forecasting?
Inventory forecasting is the process of estimating future product availability and demand so a company can determine when and how much inventory it should purchase. Forecasting typically combines current inventory, incoming purchases, sales commitments, historical demand and lead times.
Why is inventory forecasting harder for importers?
Companies purchasing internationally often have much longer replenishment cycles. Products may spend weeks in production and additional weeks in transit, which means purchasing decisions must be made much further in advance.
Should inventory in transit be included in an inventory forecast?
Yes. Inventory already purchased and currently in transit is an important part of the future inventory position. Ignoring it can cause a company to purchase inventory it may not actually need.
What is the difference between inventory on hand and inventory position?
Inventory on hand refers to products physically available now. Inventory position provides a broader picture that can include inventory on hand, incoming purchases and goods in transit while subtracting products already allocated or committed to customers.
Can inventory forecasting help prevent stockouts?
Yes. By projecting inventory availability into the future and comparing it with expected demand, companies can identify potential shortages early enough to place purchase orders or make other adjustments.
Can inventory forecasting reduce excess inventory?
Yes. Forecasting helps purchasing teams recognize inventory already on order or in transit before placing additional purchase orders. It also helps identify situations where expected supply is significantly higher than projected demand.
How far ahead should an importer forecast inventory?
The appropriate forecasting period depends largely on supplier production times and transportation lead times. Companies sourcing overseas may need to forecast several months ahead. VISCO’s inventory forecasting tools can provide visibility into product availability over the coming months.
Does VISCO provide inventory forecasting software?
Yes. VISCO includes inventory forecasting and planning tools designed around the needs of importers and global trading companies. The system brings together current inventory, open purchase orders, goods in transit, customer commitments and sales history to help users make better purchasing decisions.
Get Better Visibility Into Your Future Inventory
If your purchasing team is still combining QuickBooks, shipment reports and spreadsheets to determine what needs to be ordered, VISCO can provide a more complete view of your inventory position.
See how inventory forecasting, container tracking, landed cost calculation and purchasing can work together in one system designed specifically for global trade.
Request a VISCO Software demo and see how your team can spend less time assembling inventory data and more time making informed purchasing decisions.
