What is one key benefit of forecasting in inventory management?

Forecasting in inventory management plays a crucial role in aligning supply with demand, which is essential for effective operations. By accurately predicting future customer demand for products, businesses can make informed decisions about how much inventory to maintain. This alignment helps prevent situations such as stockouts, where demand exceeds supply, or overstocking, where inventory levels are unnecessarily high.

With better alignment, companies can optimize their inventory turnover rates, reduce holding costs, and enhance customer satisfaction by ensuring that products are available when customers need them. An accurate forecast enables businesses to effectively plan their procurement strategies, production schedules, and distribution efforts, leading to a more efficient supply chain overall.

In contrast, while a decrease in overall inventory might sound appealing, forecasting does not inherently eliminate the need for inventory; rather, it helps determine the appropriate levels to maintain. Guaranteeing sales or reducing the number of suppliers does not directly result from forecasting either and can involve other complexities in supply chain management.