WAREHOUSE FORECASTING EXPLAINED: WHAT IT IS AND HOW TO IMPROVE IT

Running a warehouse comes with its challenges. There's a constant flow of orders, inventory shifting, and teams working hard to stay on top of everything. And when demand picks up, things can get hectic fast.

That’s why having a solid warehouse forecasting method matters.

With the right approach, you can prepare for busy seasons, avoid stockouts, manage labor costs, and keep operations running smoothly.

In this guide, we'll break down the basics of warehouse forecasting, why it's important, best practices, and how tools like AI and WMSs make it easier than ever. Whether you're just getting started or looking to fine-tune your operations, there's something here for you.

Let's get into it.

What is warehouse forecasting? 

Warehouse forecasting is the process of predicting future demands, inventory needs, and operational activities within a warehouse. The goal is to make sure the right products are available at the right time and in the right quantities while minimizing costs and inefficiencies.

There are 3 key parts to warehouse forecasting:

1. Demand forecasting

Predicts how much of each product your customers will want in the future. To make those predictions, businesses look at factors like:

• Historical sales data: Past sales are often the best indicator of future demand. If a product sold well during the same time last year, there's a good chance it will again.
• Seasonality and trends: Some products have seasonal peaks (like snow shovels in winter or swimsuits in summer). Trends, like viral social media products or shifting customer preferences, also impact demand.

Forecasting demand helps you figure out what your customers will want and when so you can be ready to meet their needs.

2. Inventory forecasting

Estimates how much you have in stock and what you'll need in the future so you don't run into problems like:

• Overstocking: This happens when you order or hold too much product. It ties up money in unsold goods, takes up valuable space, and can lead to waste. 
• Stockouts: The opposite problem—running out of inventory. It leads to delays, canceled orders, and unhappy customers who might not come back.

Forecasting inventory helps you decide how much stock to hold at any given time to keep operations smooth and customers satisfied.

3. Workforce forecasting

Predicts how many people you'll need in the warehouse, and what skills they'll need to get the job done. Workforce forecasting considers things like:

• Busy periods: During peak times (like holidays or Black Friday), you'll need more people to handle the extra work. That includes roles like picking, packing, and shipping.
• Volume forecasts: By looking at how many products are expected to come in (from suppliers) and go out (to customers), you can predict labor needs in advance. 

Forecasting workforce helps you plan who you'll need, when, and what they should be able to do.

What is supply chain forecasting? 

Supply chain forecasting is a broader process that involves predicting demand, supply, and trends across the entire supply chain, from raw materials to final delivery. It includes planning for things like supplier lead times, transportation, customer demand, production schedules, and more.

Warehouse forecasting, in comparison, is more focused. It deals specifically with what happens inside the warehouse. How much inventory to stock, how much space is needed, how many workers are required, etc.

Why is warehouse forecasting important? 

Warehouse forecasting is important because it helps cut costs by keeping inventory and labor in check. When you know what to expect, you can make sure products are available when customers need them. And as your business grows or hits busy seasons, forecasting helps you scale without getting overwhelmed.

3 benefits of warehouse forecasting

1. Getting more orders out the door—on time and in full

At its core, the main job of a warehouse is simple: get orders out on time and in full. That means everything a customer orders is picked, packed, and ready for shipment when it needs to be. 

For example, if a truck is scheduled to leave at 3 p.m., the warehouse needs to have that order wrapped up and ready to load by then. That's what keeps delivery promises (like next-day shipping) on track.

But in reality, things don't always run so smoothly. Delays happen, staff gets stretched thin, and last-minute surprises throw everything off. 

This is where forecasting makes a real difference. It gives you a clear view of what's coming so you can plan ahead. You'll know when to bring in extra staff and when to restock specific items. Instead of reacting at the last minute, you're ready ahead of time and able to get more complete, on-time orders out the door.

2. Cutting down on errors

Shipping on time is one thing, but shipping the right items is just as important. If a customer opens their box and something's missing—or worse, the wrong item was sent—that's a problem. And often, it comes down to a lack of visibility or poor stock accuracy. Maybe the system said you had five units left, but in reality, you had none. Or someone picked the wrong product off the shelf because they were rushed or confused.

These little errors add up. They lead to returns, frustrated customers, and inaccurate inventory records.

With forecasting, you can avoid many of these issues. By predicting what products are likely to move and when you can make sure the right items are in stock. And with better planning around labor, your team has more time to focus and is less likely to make mistakes.

3. Reducing warehouse costs

Two of the biggest cost areas in any warehouse are labor and inventory. Forecasting helps you manage both more efficiently and cut unnecessary spending.

Workforce costs

One big issue is the inefficient use of staff. If you're a warehouse manager, you're probably trying to avoid two extremes:

1. Not enough people to finish orders on time.
2. Too many people standing around with nothing to do.

Forecasting helps you have the right number of people when you need them. By looking at incoming order volume, seasonal trends, and historical patterns, you can schedule shifts more accurately.

Inventory costs

Holding inventory costs more than just shelf space. When stock levels aren't aligned with demand, it leads to:

• Higher storage expenses: More stock takes up more room, which increases rent, utilities, and equipment needs.
• Risk of losing value: Unsold items can expire, become outdated, or get damaged.
• Cash flow problems: Money tied up in slow-moving inventory can't be used elsewhere in the business.

Forecasting helps you keep inventory lean but reliable. You stock just enough to meet demand, with a buffer for surprises, so you're not overbuying or running out. 

How to improve warehouse forecasting using a WMS

With a warehouse management system (WMS), you can predict future needs and plan ahead using data you already have. Let's break down some practical examples of how a WMS can help improve warehouse forecasting. 

Use historical data to predict labor demand

A WMS can store detailed data over time. Like order volumes, peak processing times, and how long tasks take to complete. You can use this history to spot trends and predict how many people you'll need in the warehouse and when. This turns guesswork into data-backed planning, so you're not caught off guard during busy periods.

Optimize picking with AI

Picking is one of the most frequent tasks in a warehouse, sometimes happening 10,000 times a day, making it a prime area for improvement. At Consafe Logistics, we use AI in our WMS to streamline picking and improve warehouse forecasting.

AI helps workers follow the most efficient pick routes, reducing walking time and speeding up the process. It also calculates the best box size for each order and, if needed, splits items into the right number of boxes. To save even more time, the system places frequently bought-together items near each other (just like online shops do) so pickers don't have to go far to find what they need.

It's one more way forecasting and the right tools can make daily warehouse work faster, easier, and less prone to errors. 

Want to learn more about how a WMS can help improve predictability in the warehouse?Watch this webinar: 3 ways a WMS can improve predictability in your warehouse. 

Warehouse forecasting: Why guess when you can know?

Warehouse forecasting is all about being ready for whatever comes next. Whether it's predicting demand, managing stock, or planning your team. With the right tools and data, you can keep things running effortlessly, avoid costly mistakes, and keep your customers happy.