When it takes 90 days to get a product to your customer, you need to plan ahead. This is a reality for most companies buying a product from overseas that needs to be manufactured, loaded, shipped via Ocean, unloaded, trucked to warehouse, stored and then shipped out to the customer. The challenge is that many customers will go somewhere else if you do not have the product available to ship right away.
There are three things to consider when you need to know how much inventory will be available in the future:
1. Inbound-This includes a product sitting in warehouses right now, on the water, and still in production overseas
2. Actual Sales-These are committed orders from customers with requested delivery dates
3. Projected Sales-These will typically be calculated based on historic information as either an average per month, or in the case of seasonal items, by looking at the sales history for that itme in the last year of the previous season.
For Example, let’s look at projections based on actual sales for Product A:
Status ON HAND JANUARY FEBRUARY MARCH
On Water 100 50
On Order 200
Actual Sales or Projected -100 -100 -100
Balance 200 200 150 250
Of course, some companies may prefer to break your forecast out by week instead, but you will see that the same theory applies. The Actual Sales figures will have more value in the current and upcoming month although later months, you will want to rely on project sales numbers.