Fulfillment centers need insights just as much as executives and investors. In the e-commerce space, there can be global operations for warehouses in a single location or hundreds. Regardless of the size of the enterprise, e-commerce forecasting can provide projections to organize inventory and improve a business’s reputation and revenue.
Forecasting order quantity means efficient stocking and expedited deliverables. Curating long-term business relationships with departments packing and shipping your products — internal or external — is advantageous for continued growth and support. The best way to do this is by communicating the forecasts with the fulfillment centers to drive results.
The Significance of Understanding the Supply Chain
Every point during the supply chain is a variable. Each facet creates accurate forecasts, from third-party logistics to an internal fulfillment center that packs and ships goods.
A business cannot just rely on last year’s sales numbers to create a comprehensive forecast. Expenses, outliers and unexpected scenarios must be considered for it to be sturdy. It’s crucial to communicate e-commerce forecasting to your fulfillment center because it can help you understand the variables in its step of the process:
- Sourcing multiple materials puts deliverability at risk.
- International merchants need to allot charges to process payments.
- Overseas shipping creates delays in deliverables.
- Businesses operating in your country may have higher production costs.
Fulfillment centers must know that most revenue comes from existing customer bases — this is the foundation for projecting accurate e-commerce forecasting. This grows as a company acquires new customers, creating exponential growth in the baseline for projections. Communicating this growth as it happens to fulfillment centers will help their momentum as your e-commerce business ages.
Forecasts will also help fulfillment centers become aware of your marketing strategies. This creates a more intimate relationship between fulfillment, analytics and marketing teams for the most effective satisfaction. This ties into their work, as owned audiences are people you could convert using free methods like email and social media marketing.
Companies can make predictions about the success of these campaigns. It’s essential to consider paid acquisition methods such as unsolicited offers and conversion rates based on how much your teams are investing in marketing for your e-commerce.
The Challenges in E-Commerce Forecasting for Fulfillment
Considering all these participants equally will create more accurate data for your fulfillment centers, but it isn’t just about that initial forecast delivery. Communication includes when adjustments are made and new data is measured. The consumer market is not impossible to predict, but the one constant forecasters can rely upon is oscillations.
Sharing this information can help fulfillment centers prepare for dips and spikes in sales and inventory, but it is sometimes hard to adapt. However, it may become more commonplace if every company becomes aware of how e-commerce forecasting could help change fulfillment center productivity. Fulfillment centers could adjust by changing hiring methods or executing updated storage solutions based on these forecasts.
Demand forecasting will be the focal point of these adaptations, as the different variations detail diverse business outcomes:
- Passive demand: Using past sales to predict future demand
- Active demand: Using the competitive environment and production rapidity to predict demand and create growth plans
- Long term: Focusing on a long time frame, usually more than a year, to help provide an exhaustive picture of seasonality patterns and output
- Short term: Focusing on a single day or small time window, such as a holiday
- Macro and micro: Analyzes outside forces that could potentially interrupt commerce, taking a micro or macro lens depending on the company’s objectives
- Internal business: Analyzes internal assets to see if they can keep pace with demand, including staffing needs
Companies could tell their third-party or internal fulfillment centers there will be a severe increase in inventory. This could allow them to face that challenge by implementing new systems like automated warehouse picking or more useful order management software to streamline stock control.
Another challenge comes with the attainment of the forecast. Developing it can take time, as market research happens and experts create projections based on that insight. In the meantime, fulfillment centers that could become reliant on these projections to forecast order quantities may be waiting in limbo while it’s perfected.
Imperfect, rushed or incomplete forecasts could mitigate the boom forecasts typically provide for fulfillment centers and decrease inventory expenses. So many available fulfillment centers have to juggle this, mainly if they house multiple e-commerce entities.
How Will the Forecast Order Quantity Help Your Fulfillment Center?
E-commerce forecasting can help fulfillment centers prepare for the busiest seasons — for some, that’s related to holidays and for others, it’s connected to trends. They must be all-encompassing, usually outlining more than the average number of units or a simple percentage increase over the previous year. What happens if a celebrity influencer stops endorsing your product and that affects sales — how will your forecast reflect this hurdle so fulfillment centers know how to acclimate?
A forecast also details promotions, sales and event fluctuations that could affect forecast order quantity. Depending on the scope, all estimates should gradually be developed immediately after the previous sales period. They should consider everything from competition to season, considering the type of products and the market available for them in the present.
Fulfillment centers will appreciate forecasts that clearly outline their company goals and standards, so they know inventory specs and what they can do to maintain a trusting relationship. Though it may be a third party or not, they have just as much, if not more, of an effect on customers than the business itself.
Your fulfillment center will appreciate you communicating inventory needs and expectations. It will help them organize and remain compliant with contractual agreements, especially as they navigate an unprecedented demand increase for e-commerce fulfillment responsibilities. Better communication equals greater organization, leading to snappier shipping and better customer satisfaction.
It will also create accountability across sectors. Inconsistent data is a considerable issue in supply chains as products exchange countless hands. Communicating with fulfillment centers about expectations lets them report back with accurate information because it was from you, not a third party. It’s another set of checks and balances to ensure every item reaches its destination.
E-Commerce Forecasting for Fulfillment Centers
Creating a business that will survive in a sea of many means you must communicate your e-commerce forecasting to fulfillment centers. Improve customer loyalty by creating a solid forecast foundation. You can decrease financial risk because everyone is on the same page regarding sales expectations.
This will create strong business relationships, which is better for any bottom line and the customer who receives the package.