Predictability reflects the level of certainty in forecasting future demand based on past demand patterns. It helps you assess how reliable your forecasts are, allowing you to make better decisions about stock levels, resource allocation, and managing risk.
What is the Predictability Score?
The Predictability Score in Recurrency offers clear insight into forecast reliability. This score is determined by analyzing:
Historical usage trends (how consistently an item is ordered)
Order frequency spread (how often orders are placed)
Predictability is categorized into four levels:
Very High: The item follows a highly consistent demand pattern, making forecasts extremely reliable.
High: The item shows mostly consistent demand, with minor fluctuations.
Medium: The demand is somewhat irregular, meaning forecasts require a bit more attention.
Low: The item’s demand is unpredictable, necessitating more careful review and monitoring.
Why Predictability Matters
Using the Predictability Score allows you to focus on where your attention is most needed:
High predictability items can often be accepted in bulk without extensive review, saving you time and reducing manual oversight.
Low predictability items may require a deeper review at a location, supplier, or individual level, as the irregularity of demand makes these forecasts less certain.
By factoring predictability into your workflow, you can:
Improve efficiency: Prioritize high-predictability items for quicker, more confident replenishment decisions.
Mitigate risks: Spend more time evaluating low-predictability items to avoid overstocking or stockouts.
Optimize inventory: Trust the reliability of forecasts for high-scoring items to ensure your inventory aligns with demand patterns.
How Predictability Enhances Decision-Making
The Predictability Score provides you with a clear indicator of the reliability of forecasts, helping you streamline your replenishment process. Items with Very High and High predictability scores can typically be bulk accepted with minimal review. However, items with Medium or Low predictability scores signal the need for a more detailed evaluation before finalizing any decisions.
By using Predictability Scores effectively, you can simplify your workflow and focus your attention on items where it's most needed, ensuring you’re always making the most informed stock management decisions.