Configuring global forecast settings

Forecasting is one of the core features of Demand Planner. Forecasted sales drive your recommendations for replenishment.

Click on the Forecast tab within Settings to customize account-wide settings affecting the sales forecast and related analytics. 

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Forecast settings

Use stockouts history

By default, Demand Planner takes out-of-stock information into consideration. This means that the forecast will exclude the time a product is out-of-stock so that the sales velocity is not understated. If your store allows overselling (continued selling even when an item is out-of-stock), then you should uncheck the box for "Adjust forecast using out-of-stock information".

Default forecasting method

Choose between three methods: recent sales and trends, last sales or seasonal.

Read more about each method below.

Apply seasonal increase for non-seasonal products for Black Friday and Christmas

When this option is set, Demand Planner takes holiday sales seasons, including Black Friday and Cyber Monday, into account for items that are non-seasonal.

The previous year's sales are checked in the months of November and December and if increases are detected, these are automatically applied to your future forecast for these times.

Bundles are assemblies by default

This setting considers all bundles to be assemblies. If all bundles in the account are assembled prior to fulfillment (that is, the stock of bundles is separate from stock for each of its components) then this setting should be enabled. If bundles are assembled at the time of fulfillment, then do not check this box. Learn more about bundles and packs here.

Use gross sales

Demand Planner subtracts returns from the sales figures by default. Enable this setting to ignore returns.

Default replenishment

Default replenishment can be set for products that don't have a sales history.

For example, if an item is recommended to replenish zero units because it doesn't yet have any sales, a default replenishment of 5 will create a replenishment recommendation of 5 units.

Default min stock (safety stock)

Safety stock levels can be set on the variant level in the Replenishment report. The safety stock level will be added to any replenishment recommendation.

We recommend adding to your Days of Stock so that you have a dynamic buffer for your supply chain. Using safety stock uses a static number, meaning this will not grow as your store grows.

Note: Setting the safety stock level here will apply to all variants.

The average value of VAT

If you would like to include VAT in your sales forecasting, you can include the percentage here, e.g. '20' for 20% VAT.

Alerts

Low stock alerts and vendor alerts

Read about configuring alerts here.

ABC analysis

ABC Class or “A” Class, “B” Class, “C” Class

Classes are categories of your inventory.

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By default, “A” Class includes SKUs comprising the top 80% of revenue, “B” Class is the next 15%, and “C” Class is the final 5%, but you can configure the percentages here.

You can also select what length of time to use to classify the products, and whether to use the number of units sold instead of revenue.

Forecast methods

Forecast settings can set based on multiple forecast methodologies:

  • Recent sales and trends
  • Last sales
  • Seasonal

Recent sales and trends

This method uses recent sales and stockouts during the specified sales period when generating a forecast. Demand Planner calculates sales velocity and trend-based customer orders placed during this timeframe, where sales velocity is the rate of sales excluding out of stock days. 

Note: Holiday sales (such as Black Friday, Cyber Monday and the week before Christmas) are excluded when using this method so unusually high sales do not skew forecasting calculations.

The sales period and trend can be adjusted by variant by clicking the "i" icon under the 'Details' column. Then navigate to the Forecast Settings tab and enable 'Use Custom Forecasting Settings'.

 

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Last Sales

This forecasting method is best for non-seasonal products. It is based on the average sales for the last "X" number of days, where you set the number of days. 

If the 'Use stockouts history' setting is enabled, then the forecast will only look at periods when the product had available stock to calculate the sales velocity.

For example, if the number of days is set to 15 the algorithm will:

  1. Look at sales and inventory over the last 15 days
  2. If the product went out of stock during the last 15 days, it looks at the past 15 days when there was available stock to calculate the sales velocity, i.e. sales during stockout periods are ignored
  3. If the product had no inventory in the last 15 days, it uses the last sale date when it was available, then looks at sales and stock from the prior 15 days to calculate the sales velocity

Tip: Brightpearl tracks inventory and sales history starting with the day you go live. Since it's not possible to see past stock for new accounts, Demand Planner will look at the 'Last Sold At' date then add sales from the prior X days to calculate sales velocity.

Exclusions

The following are ignored using this forecast method:

  • Manually inputted stockouts
  • Manually adjusted sales history
  • Wholesale orders
  • Trends

Seasonal

This forecast method refers to the same months in prior years as the sales reference period. This is beneficial for holiday and seasonally driven items with 12+ months of history. Sales velocity is not a consideration in this case. Trend is applied by evaluating sales over the last 12 months vs. the prior 12 months. 

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