Should you replenish the inventory of your retail or e-commerce store based on demand forecasts or actual customer demand? This is a question of great importance for many businesses around the world, big as well as small. Whether or not you use an automated inventory control app already, the key to effectively replenishing your inventory is understanding your customers and their wants.

Forecasts or the Push System

One inventory replenishment strategy you can use is the push system, in which you rely on forecasts provided by an inventory control app or another type of software to determine what to order and how often. Because this strategy usually requires a general, comprehensive approach to stock keeping units (SKUs) and decision points, it often results in broad inventory replenishment orders that are not always sensitive to differences in demand.

While convenient, the push system is ultimately only as effective as the forecasts on which it is based. Inventory management and control apps as well as inventory forecasting tools have come a long way in recent years, being able to offer accurate forecasts that take into account seasonality and a wealth of other factors. That said, forecasts are ultimately nothing more than guesses, and some of them can be either inaccurate, or completely wrong.

Customer Demand or the Pull System

Another inventory replenishment strategy that is winning favor with of many companies is the pull system, which uses daily consumer-level demand data to predict customer behavior. Based on actual product sales for every store, the pull system focuses on the immediate and short-term needs of your customers, being optimized to promote quick replenishment times and by doing so keep the cost of inventory management in check.

One of the advantages of the pull system is that it can handle predictions for individual products more effectively than a push system, allowing you to replenish only those specific products that need to be in order to meet customer demand. The pull system works well with the basic reorder point approach of replenishing a product for every product you sell, which in turn can help you optimize inventory costs.

The Bottom Line

While the push system based entirely on forecasts continues to be used around the world, retailers and e-commerce companies that make the transition to the safer and more accurate pull system can maintain optimal inventory levels, avoiding overstock as well as understock, reduce inventory waste and the costs associated with it, and ensure that all product orders can be fulfilled on time.

By combining the power of accurate forecasts with customer demand data, a modern automated inventory control solution such as DataQlick enables your business to take full advantage of the effective pull inventory replenishment approach. This helps you reduce inventory, improve the accuracy of your orders, boost service levels, and ultimately increase revenues. Harness the power of the pull inventory replenishment system by discovering DataQlick, an intuitive and feature-rich QuickBooks online inventory control app.