In class, we participated in an activity where we had to estimate the amount of inventory that we needed in order to keep up with forecast demand.  At first, our group was a little bit lost.  Okay, A LOT a bit lost.  After figuring it out, we fared well and ended up understanding the purpose of the activity.

This activity made me think of a night at an old job I used to have.  I was asked to help take inventory of the items that were sitting outside, stock the shelves, and count and put whatever was extra into boxes to be loaded in our overhead shelving.  Thinking this would be easy and a quick way to end my night, I happily agreed to do it.

I walked outside, ready to do as told and just stopped dead in my tracks.  I didn’t want this task anymore and regretted taking it.  There were two wide isles of carts packed with items.  Apparently we must have really been doing well in sales, since we needed to stock ALL of this.  So I grab the closest cart to me, pull it inside, and start stocking the product where it belonged.  The space didn’t get filled, and I had no more of this particular product in any of the other carts.  Clearly we didn’t order enough.

The second cart went the opposite way.  I grabbed the cart of weed killer and went to the area to put everything on the shelf.  This area was full, so I went to return the cart back outside.  To my horror there wasn’t just this cart, but there were about twelve carts full of this weed killer.  And it wasn’t even the season for weed killer…

This overstock happened with quite a few other items, as did the shortage of popular items.  This was definitely an example of poor inventory management, and I’m curious as to exactly how much they spent on both holding costs and shortage costs.  They may have saved on ordering costs on overstocked items, but will end up having to order more of that which they understocked.  Someone added a couple extra zeroes to their weed killer order, and their inventory costs.

On the bright side, I can guarantee that their lawn will be weed free for the next ten years.

 

Every business has to forecast upcoming trends in order to keep a proper supply for their demand.  Whether for hiring and firing purposes, deciding what to produce, or deciding what sales will be, every company needs to use forecasting in order to maintain success.

In class, we talked about the differences between qualitative and quantitative forecasting.  Quantitative, though difficult in the various computation methods, seemed straight forward.  Qualitative, on the other hand, seemed very difficult since what is correct cannot be defined.

This made me think about the fashion industry.  Everything in this industry seems to be opinion based.  I mean, there are some trends that really make you wonder who thought about them and who would WANT to spend all that money to wear them.  But there are people who buy these trends and proudly wear them!

Before certain trends even come out, some companies perform a trend forecast.  A good example of a company that does this is www.trendstop.com.  They forecast everything from what colors will be popular in the upcoming seasons to what materials will be most prevalent for sales.  But how do they know this?  Do they just have a box of colored swatches in various materials and shades, close their eyes, and pull something out?  Although this really seems like this could be a possibility, they actually have a method for this type of quantitative forecasting madness.

Companies such as trendstop.com have people who actually study trends globally.  They look at what people on the streets are wearing, what has been reoccurring on the runways, what has been selling more in stores, and what has been spotted on key media figures.  Fashion always repeats itself, and trend spotters look for this as well since patterns in repetition may be found.

These trend spotters are very important in not only the fashion industry, but in the daily operations of department stores as well.  Without knowing what the trend will be for the next few seasons, how can they figure out what to buy in order to target the most buyers?  As silly as trend forecasting may seem, I’ve realized that it’s just another form of forecasting that is essential for businesses in the fashion industry to thrive.