A customer calls to order 40 bearings they need this week. You do not have them. You order them from your supplier, they arrive in three weeks, and by then the customer already bought them from your competitor. You lost the sale and, worse, you opened the door to another supplier in one of your accounts.
The same month, you have $18,000 in a bearing model you bought in volume eight months ago because it “was going to sell,” and it is still on the shelf gathering dust. That capital is frozen, paying warehouse rent, while you were short on cash to stock the 40 bearings that were actually selling.
Those two problems are the same failure: you are not forecasting demand. You buy on hunches, on what sold last time, or on what the supplier pushed at you on sale. The result is the worst possible combination: out of stock on what sells, and overstocked on what does not. Forecasting well does not eliminate uncertainty, but it turns buying from a guess into an informed decision.
Here is how to forecast demand so you never run out or overstock.
1. Start With Your Own Sales History, Not Hunches
The best predictor of what you will sell is what you already sold. Your sales history, by product, is the foundation of any forecast, and most distributors have it but do not use it. They know “more or less” what moves, but they do not have the data on how many units of each part number they sold each month over the last year.
That data changes buying completely. You see which part numbers sell consistently (easy to forecast), which are sporadic (require a different approach), and which stopped selling (candidates not to reorder). Without the history, you buy blind; with it, you buy on evidence.
How to do it: Pull your sales history by part number, by month, for the last year or two. Identify your steady-moving products, your sporadic products, and your dead products. This breakdown is the raw material of forecasting. You do not need sophisticated software to start; a well-organized sheet with your history already puts you ahead of most.
2. Separate Steady Demand From Sporadic and Treat Them Differently
Not all products are forecast the same way. A bearing you sell 30-40 units of every month, consistently, is forecast with confidence: next month you will sell something close to that. A bearing you sold 50 units of once in March and nothing else all year is not forecast by average, because the “monthly average” of 4 units describes nothing real.
Mixing them is a classic error. If you average everything, you end up with the wrong safety stock for both: insufficient for the steady ones and excessive for the sporadic ones. Each demand type needs its own buying logic.
How to do it: Classify your products by demand pattern. For steady-demand ones, forecast on the recent average with its normal variation. For sporadic ones, do not keep high stock “just in case”; manage them on low minimums or to-order, or tie the purchase to the specific account that consumes them. Treating the different differently is half of a good forecast.
3. Incorporate What You Know Your History Cannot See
History looks backward; the forecast looks forward, and there are things coming that history cannot anticipate. A big new customer you just won will increase demand for certain part numbers. A project you know a customer is about to start will consume specific products. The seasonality of the industries you serve (a plant that shuts down at a certain time, a harvest, a maintenance cycle) moves demand predictably.
This information lives in your sales team and in your relationship with customers, not in the system. A good forecast combines the historical data with this forward knowledge.
How to do it: Before buying, consult your sales team about what is coming: new accounts, known projects, changes in large customers. Add the known seasonality of the industries you serve. Adjust the historical forecast with this layer of forward knowledge. History gives you the base; your commercial team gives you what the base cannot see.
4. Set Reorder Points and Minimums by Product, Not One Blanket Rule
A forecast becomes actionable when it translates into reorder points: the inventory level that triggers a new purchase, calculated so the resupply arrives before you run out. This point depends on two things per product: how fast it sells and how long your supplier takes to fill (the lead time).
A fast-selling product with a slow supplier needs a high reorder point, because you will run out long before the replacement arrives if you wait too long. A slow-selling product with a fast supplier needs a low point. Applying the same rule to everything guarantees shortages in some and excess in others. The connection between lead time and inventory levels, and the cost of getting it wrong, we cover in depth in why your safety stock is killing your cash flow.
How to do it: For each steady-demand product, calculate its reorder point from its selling speed and your supplier’s lead time. Set a minimum that covers demand during the lead time plus a safety margin proportional to variability. Automate the alert when inventory hits the reorder point. That way you buy on time, neither too early (freezing capital) nor too late (running out).
5. Review and Adjust the Forecast Regularly
A forecast is not a document you make once a year. Demand changes: customers grow or leave, products come and go, the market moves. A forecast that is not reviewed goes stale and becomes a guess again, only a guess with the appearance of data.
The discipline of reviewing the forecast against what actually happened is what improves it over time. When you see you forecast 40 and sold 25, you learn; when you adjust and get it right, the system sharpens. The forecast is a cycle, not an event.
How to do it: Review your forecast against actual sales monthly or quarterly. Adjust reorder points and minimums based on what you learned. Retire the part numbers that died and add the new ones that took off. Constant review turns a mediocre forecast into an increasingly precise one.
Want to Stop Buying on Hunches?
At IVOR Bearings International we help distributors structure their demand forecast and reorder points to have what sells without freezing capital in what does not. HERE we work on it with you. Or email ventas@ivorbearingsint.com with your current inventory situation.
The Regional Example: From Shortages and Excess to Inventory That Turns
A distributor in Costa Rica lived the classic contradiction: it lost sales to shortages almost every week, and at the same time had close to $60,000 in inventory that had not moved in over six months. It bought on instinct and on its suppliers’ offers.
It started with the basics: it pulled its sales history by part number for the last year. It discovered that about 40 part numbers represented 70% of its sales and moved steadily, while hundreds of sporadic part numbers occupied most of the frozen capital. It put the 40 steady products on reorder points calculated by speed and lead time, and moved the sporadic ones to-order or on low minimums. It consulted its sales team about the large accounts that were coming.
In six months, shortages of its key products nearly disappeared, and it freed roughly $35,000 from the dead inventory it stopped reordering. The same business, with what sells available and without the capital trapped in what does not. It did not buy more; it bought better.
Forecasting and Recurring Accounts Reinforce Each Other
It is worth noting something: the more predictable your demand, the easier it is to forecast. And the most predictable demand comes from recurring accounts, customers who buy from you regularly and in a planned way rather than sporadically. A customer with a supply agreement or steady consumption gives you an almost-free forecast; a customer who shows up only in emergencies gives you noise.
That is why forecasting and building recurring accounts reinforce each other: every account you turn recurring makes your forecast more precise, which in turn improves your availability for those accounts. The mechanism for building that recurring base we cover in how to turn industrial clients into recurring accounts.
Your Action Plan
- Pull your sales history by part number for the last year. It is the foundation of any forecast and you already have it in your system.
- Classify by demand pattern: steady, sporadic, dead. Each type is bought differently.
- Set reorder points by product from selling speed and supplier lead time, not one blanket rule for all.
- Add the forward knowledge from your sales team: new accounts, projects, seasonality, that history cannot see.
- Partner with commercial operations experts. At IVOR Bearings International we accompany distributors in structuring forecasting and resupply that balance availability and cash flow.
Buying Well Is Not Buying a Lot or a Little, It Is Buying the Right Thing
The distributor who buys on hunches always swings between two errors: out of what sells and full of what does not. They think the problem is money (“I need more capital for inventory”), when it is really information: they do not know what to buy, how much, or when.
Forecasting demand solves the real problem. With your history, the classification by pattern, the reorder points by product, and your team’s knowledge of what is coming, buying stops being a bet. You have what sells when the customer asks for it, and you stop freezing capital in what does not turn. The same money, well directed, delivers twice as much.
Contact IVOR Bearings International today. HERE we work on it with you. Or email ventas@ivorbearingsint.com with your inventory situation.
Stop buying blind. Forecast, and have the right thing when the customer asks for it.
