The most important benefit of Direct Tech's software for West Chester, Ohio-based home improvement product retailer Improvements was that Forecast*21 allowed the company to segment demand by source—whether sales came from the catalog or from the Web site, ImprovementsCatalog.com. Leslie Burke, Improvement's manager of merchandising information, says now the company basically has removed the problem of placing items on back order. "Now, because we know this is, in general, how [a product is] going to sell, how quickly we're going to go through the inventory, it allows [Improvements] to buy earlier and earlier," Burke says.
When marketers get all of this right, Murphy says, it can reduce costs—as it did for his client, W.W. Williams of Columbus, Ohio, a service parts distributor for a large engine manufacturer. "[The client was] able to redistribute that inventory throughout [its] network to appropriately match the demand at each of those  branches. By doing so, [it was] able to reduce [its] freight expenses of transferring product from branch to branch in order to meet demand."
Palzkill says the optimization provides another benefit to marketers: "It all comes down to sales and profits. If you manage your forecasts and inventory better, you will generate more sales because you'll have the inventory when they want it. If it isn't there, you lose the sale. And on the inventory side, you want to schedule your inventory for optimal cash flow. So you don't want the inventory too soon that it's sitting there and you're paying for inventory that you don't need."