Do you need Sales and Inventory forecasting to streamline your business?

Marketing Team
Published on October 17, 2021

Microsoft Dynamics 365 Business Central can provide businesses with the robust forecasting needs to remain competitive in today's marketplace---domestic and global. Actual demand is created from sales and production orders, which are forecasted using forecasting functionality. The projection is compared to the sales and manufacturing orders while creating the Master Production Schedule (MPS). Forecasting allows your company to create "what if" scenarios and efficiently and cost-effectively plan for and meet demand. Accurate forecasting can make a critical difference in customer satisfaction levels with regard to order promising dates and on-time delivery.

What is the need for a Forecast?

The forecasting functionality in Dynamics 365 Business Central can be used to create sales and inventory forecasts, in combination or independently. The sales forecast is the sales department's best guess at what will be sold in the future and is specified by item and by period, which in turn helps to predict the inventory limits. These forecasts are used by decision-makers to plan for corporate expansion and to figure out how to keep the company growing. The accuracy of such forecasts will determine the success of a new business. If projections are created in a methodical manner, the business will run smoothly and the possibilities of failure will be reduced. Research shows, how much faith companies put in Business Central Forecasting accuracy to ensure growth.

In Business Central you can use the extension of Azure AI to predict future sales based on your sales history to help you avoid inventory shortages. For example, when you choose an item on the Items page, the chart in the Item Forecast pane shows the estimated sales of this item in the coming period. This way you can see if you are likely to run out of stock of the item soon. You can also use the extension to suggest when to stock up on inventory.

Why are Sales and Inventory Forecasting Important?


“Companies with error-free forecasts are 10% more likely to grow revenue year-over-year and twice as likely to lead their field.”   

- Aberdeen


Business Central sales forecasting also helps you to plan the Sales Budget ahead of its time. It synchronizes the sales budget with production plans, business planning, budgeting, and goal-setting. Sales forecasting is the practice of making an educated guess about your future sales over a set period of time. In order to prepare for demand and successfully manage cash flow and inventory, accurate sales forecasting is crucial to wise business management. Once you have a decent idea of what your future sales might be, you can start planning an intelligent procurement strategy to ensure that your supply keeps up with client demand.

When it comes to inventory management, most eCommerce shop owners are well aware that having too little or too much inventory may be disastrous. Purchasing too much inventory can negatively impact cash flow and earnings potential, while having too little inventory might prevent customers from making purchases, resulting in lower sales. The practice of estimating when and how much you'll need to order is known as inventory forecasting. It determines the best time to restock stock by combining data such as historical sales history, sales and demand patterns, and the average lead time for receiving new inventory.

What are the Key Metrics of Sales and Inventory Forecast?

Track the sales metrics with Business Central automatically by feeding the data over time. You can also integrate Dynamics 365 Sales with Business Central to synchronize your sales data for easier operations. Here are the basic requirements you need to log in to predict the outcome of the sale in a given time.

With Inventory Forecasting, you can start building a procurement strategy to have just enough stock on hand to fulfill sales demand, resulting in a high inventory turnover rate and low inventory holding cost. Here are the fundamental metrics that Business Central will focus on.

Top 5 Benefits of Sales and Inventory Forecasting

Now that you have the idea of why we need forecasts to streamline unexpected business needs, let’s look at some of the benefits of Business Central Sales and Inventory Forecasting.

  1. Less inventory needed on hand: You can store merchandise in bulk in a warehouse and let it collect dust, but it isn't usually a lucrative business model. You won't have to buy the inventory you don't need for a specific time period if you have a data-driven sales forecast on how much you'll require. This means you'll be able to optimize inventory accounting, enhance cash flow, and even free up finances for other aspects of your company.
  2. More sales from fewer out-of-stock items: You won't have to worry about stockouts or backorders if you have a proper sales forecast to stock enough inventory on hand. You'll be able to fulfill each order as soon as it's placed and provide them with the delivery they expect. This is how you use Business Central Sales and Inventory forecasting to increase sales. "Out of stock" inventory can never drive in more customers, Business Central can help you recognize your customer needs and prepare to deliver them in a given time.
  3. More efficient production cycle: Inventory forecasting aids in the better management of products throughout the supply chain. You can work more efficiently with your supplier and obtain a better grasp of production and sales cycles if you know your manufacturer's lead times, your warehouse receiving timeframes, and the exact stock levels for each product for which you need to place a new buy order. This way, it's not a guessing game, and you can't easily order additional merchandise when you're running low. You'll be able to make more informed judgments and avoid having to rush production and shipments.
  4. Recognizing Trends: A trend is a change of demand over a short period of time and understanding a trend can provide you with a competitive edge. With sales forecasting by Business Central, you can identify the seasonal trends by analyzing last quarter's sales pattern and stock accordingly. You can get more granular and analyze trends by asking the following questions.
  • Do customers buy the same items from you more than once?
  • Are customers buying multiple items from you each time they place an order?
  • Which products are frequently purchased together?"

With this information, you may be able to predict any repeat purchases as you attract new consumers. Keeping track of which products are bought together might help you better understand your clients' buying habits and even decide how to arrange your products for new offers or promotions. You might even notice trends in how one SKU influences or drives demand another.

  1. Reorder Point: Stock depletes as you successfully fulfill orders on time, you need to restock your inventory before it's too late. How to understand when it's time to stock again and by how much? The first step would be to start the season with a firm indication of achievable sales targets based on statistical data. Forecasts aid revenue teams in achieving their objectives by detecting early warning signs in their pipeline and adjusting the course before it's too late. By forecasting your sales target you can stock and restock orders accordingly. You can set a predetermined reorder point, when SKU touches the mark you can send an alert to your inventory planner to create a buy order (using the reorder quantity formula).


Dynamics 365 Business Central is an ERP solution built for managing all your business processes in one place via its intuitive interface and a strong software engine, Business Central covers all modern business experience pillars. It comes with extensive capabilities and functionalities to create your own predictive web service based on a public model named Forecasting model for Microsoft Business Central. This predictive model is available online in the Azure AI Gallery. For Rapid Implementation, talk to us today to reap all the updated benefits of Business Central.