ERP Forecasting: Demand Projections in Your Distribution Center

Wholesale distributors don’t have the luxury of consistent sales easily predicted by forecasts. So they must be agile, forecasting both supply and demands as best as possible and able to react quickly to the inevitable surprise. This means going beyond your spreadsheet and using distribution ERP forecasting.

Your customers must provide their best efforts for expected demands. They’re the ones who schedule promotions and manage the lives of their products. You cannot rely on statistical projections in all cases. Keep communication lines open and try to know what products will be promoted and when and their best estimate of volumes.

Matching Supply to Demand

Sales orders can drive your ERP forecasting. You can also use forecast orders to augment the sales orders. They will signal suggested buys and alert you to needed warehouse space and work capacity just like a sales order. Use some caution: Unless you have an agreement with the customer whose orders you are forecasting, you could be left with unsold inventory.

Work with your suppliers to match supply to demand. Set up internally around the promotions and have the products slotted for efficient handling. See if your distribution ERP will support different PO types. Order and hold at the shipper or sell on consignment are a couple of possibilities.

Work with transportation providers to have additional outbound trips scheduled and any additional inbound loads arrived before the rush of the promotion. After the promotion, quickly manage any unshipped product. Return it to the suppliers or schedule an “inventory clearance” with the customer. Your distribution ERP will support returns just like a negative PO receipt.

Managing the Exceptions

Some products are seasonal and the volume will vary as months pass during the year. Some statistical projections could be in order for these but try to get your customer to do the forecasting. Arrange payment terms with your suppliers around the seasons. ERP will support a wide variety of payment terms. You might bring product into the warehouse throughout the year and ship it all just before Christmas. Try to schedule the payment for just after Christmas. Remember, ERP forecasting is not just about product flow; you are also forecasting cash flow.

Save money on inbound shipping by using containerization when possible. You need a little of product A and a little product B. ERP forecasting can tell you they can be shipped together in a full container. Product B will be on hand early but the difference in total cost could result in improved profit.

You have many customers and many suppliers. They each have their own schedules and you are in the middle. Make the best inventory plan you can using ERP forecasting and then manage the exceptions. Use your ERP to send alert signals when those exceptions are found by the system. Your plan will right more than it is wrong, so keep your head clear and effectively manage the few exceptions.

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Tom Miller

About the author…

Tom completed implementations of Epicor, SAP, QAD, and Micro MRP. He works as a logistics and supply chain manager and he always looks for processes to improve. He lives near San Francisco Bay in California and can be found on the water in his kayak or on the road riding his motorcycle. Contact Tom at customerteam@erpfocus.com.

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Tom Miller

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