Avoid the hidden dangers of the 13-week average
Many retail and wholesale businesses rely on a 13-week average to forecast inventory, but this method often leads to miscalculations – and missed opportunities for optimisation. Here’s why the 13-week average could be a costly mistake:
- Missing the mark during growth periods
When demand for your products are growing, the 13-week average fails to capture upward trends – leading to frequent stockouts and lost sales. Your business could be missing out on growth opportunities as it doesn’t adapt in time to capitalise on increased demand.
- Risk of overstock during a decline
As products enter a decline phase, relying on the 13-week average can leave you with excess inventory. This excess ties up valuable capital in products that aren’t moving. This inefficiency can burden your operations with unnecessary losses and costs.
- Ignoring seasonal shifts
The 13-week average overlooks seasonal fluctuations, resulting in either too little stock during peak periods or too much afterwards. This means missed sales during high-demand seasons or holding onto surplus stock that erodes profitability.
- Vulnerability to fluctuating demand
When order sizes and demand fluctuate, reliance on the 13-week average can leave you short. This method doesn’t account for sudden changes in order sizes or demand patterns, exposing you to the dual risks of stockouts and overstock. This can disrupt your supply chain and impact your ability to meet customer needs effectively.
FinStock’s dynamic solutions can help.
Our dynamic inventory planning solution provides enhanced forecasting capabilities, considering each product’s behaviour at each location—whether it’s seasonal, growing, declining, or showing high variability in both order size or units sold.
Take the next step towards supply chain excellence.
Ready to move to a dynamic and agile supply chain performance? Contact our team of experts today to learn how our innovative solutions can optimise your operations and elevate your business. Together, we’ll eliminate inefficiencies and unlock new opportunities for growth.
