What’s inventory planning? Well, it’s pretty much exactly what it sounds like. Inventory planning tools use forecasts to help your company have the correct amount of inventory in stock. Accurate inventory levels are beneficial to your company in many ways, including creating more flexibility in operations, saving financial resources, and more.
Suppliers and retailers approach inventory management systems
differently from one another. Suppliers often break down their data
geographically, and retailers tend to separate their data into channels such as
e-commerce and in-store sales. Suppliers compare the data from the current
month to the data of the same month the previous year, while retailers compare
the sales of the current month to the sales of the previous month to predict
future demand. These differing methods yield very different results for
suppliers and retailers.
Differing data between suppliers and retailers present further
struggles as they strive to work together. Unstable interactions make it
difficult for them to share sensitive data with one another. They work hard to attain
the data they have, so freely sharing it with someone with different results
can be quite a struggle. This lack of transparency causes further
complications.
For example, a supplier uses the data of the previous year and the
current month to predict they will sell 100 raincoats, and they make sure they
have 100 raincoats in stock for next month. Their retail customer, however,
looks at the data from last month and sees that not many people have been
purchasing raincoats. They seem to have a safe cushion of extra inventory, so
they don’t order any raincoats from the supplier. Like last year, the demand for
raincoats spikes the next month, and they quickly sell out. They figure if they
had had 50 more coats, they would have met the consumer demand perfectly.
What’s wrong with this situation? A few things can be addressed.
First, the supplier ordered too many raincoats. Even amid their highest demand,
the retailer only needed half of the supplier’s predicted amount. Additionally,
the retail store also had inaccurate data. They made plans based on sales that
never happened. Both mistakes are damaging to these companies. Overstock is a
waste of money, storage, labor, and other resources. Stockout situations result
in lost customers and reputation.
You might be wondering why this all matters, suppliers and retailers
are different after all. Well, suppliers and retailers work together daily. Like
in the example before, retail stores must get their products from suppliers, and
suppliers need retail customers to purchase their inventory.
Inventory forecasting software can address these challenges.
Inventory Management Software takes many factors into account as reliable
forecasts are created. These factors include, historical data, current trends,
seasonal trends, and more. Inventory planning tools create forecasts you can
use to make plans and decisions for your business. Rather than stepping blindly
into the future, you can have a sense of security with inventory forecasting
software.
There are many companies who have seen the benefits that inventory
management systems offer. Randa Apparel and Accessories is one of the world’s
largest fashion manufacturers. They do business in 11 countries and sell items
from over 50 different brands to multiple major retailers.
Randa found themselves struggling to manage various parts of their
business, like optimizing inventory, maintaining customer service levels, and
managing the thousands of items they sell. They were seeing frequent stockouts,
and they knew they needed to find a new way to conduct their business
operations. Randa found a solution; they implemented a demand planning
software. This software analyzes the demand of their products down to small
details such as different colors or patterns. Having this reliable resource has
allowed Randa to have a much better handle on their inventory management.
Randa has seen multiple improvements as they have started using
demand planning software.
1. Increased forecast accuracy
With
more accurate forecasts, Randa has a new sense of freedom. They no longer have
to wait and see what problems are going to arise. They know what their demand
will be, and they have the inventory to meet it. Randa can act with surety and
see improvements in their efficiency.
2. Optimized inventory
With
much more accurate inventory, Randa has the chance to improve in multiple
areas. Their warehouses can function much more efficiently now, and they don’t
need excess labor hours because they aren’t managing extra inventory. Inventory
forecasting software has allowed them to see improvements all over their
business.
3. Visibility
With this software, Randa has been given a much better view of their entire supply chain. Reliable data has given them the chance to make confident decisions that are backed up by accurate data. They can now clearly see how their inventory operations are being carried out, from start to finish.
Randa is just one example of a company that has been majorly
improved using inventory forecasting software. Inventory planning tools have
the ability of greatly strengthening your company. If you want to save money,
time, and headaches, you need to learn more about inventory forecasting
software today. It’s sure to improve your company in many ways.
