Why Should Modern Retailers Invest in Inventory Planning Software?
For retail businesses, replenishment planning is an important aspect. The most necessary thing for retailers is to stock up their inventory with goods having high demand in the appropriate locations to satisfy consumer demand promptly to satisfy and delight customers.
When your business scales, you should manage various sales channels and satisfy consumer demand across all the distribution centers. It is undoubtedly a complex process, and you must keep an inventory record across all the warehouses and physical store locations. Keeping track of the inventory is a challenging task, and thus the requirement for replenishment planning software is essential.
Problems Faced in Manual Inventory Planning
Manual inventory imposes great challenges, such as order processing from multiple sales channels individually to checking stocks daily to maintain an optimally stocked inventory at every location. It is a time-consuming method and is prone to errors and mistakes. The time can be utilized for more critical business development and growth tasks. Manual inventory planning cannot provide real-time visibility into the stock levels at different locations; thus, there remains a gap in replenishment planning. The replenishment orders cannot be placed at the right time, resulting in out-of-stock situations and organizations losing sales. Consumer demand cannot be met on time, resulting in customer dissatisfaction and hampering the brand’s reputation.
Retail businesses should obtain an efficient replenishment planning system that automates regular tasks through artificial intelligence and machine learning to prevent these issues.
What Is Inventory Planning?
Inventory planning is the process of determining the right levels of inventory. The time for replenishment orders is also identified to align it with the sales and production ability. It leads to an efficient and smooth supply chain, enhanced customer satisfaction, and correct anticipations of demand.
If inventory planning is not done correctly, it can harm an enterprise’s income or cash flow.
Objectives of Replenishment Planning
The main motive of businesses is to comprehend demand beforehand to satisfy demand at the appropriate time. It affects the business overall as getting new customers is more complex than retaining the existing ones.
- Cost Control – The main objective of replenishment planning is to reduce the cost of storing goods in the warehouse. It assists in minimizing the storage costs such as taxes, labor, purchase costs, stock decay, etc.
- Enough Storage – Optimum storage facilities assist you in increasing profits. By stocking products that have high demand, you can meet sales effectively. The lead times can be reduced, and you can obtain a productive layout.
How to Plan Inventory?
Replenishment planning is directly related to the revenue of a business. Businesses can reduce stockouts while maintaining the manufacturing flow. Businesses can obtain goods at discounted rates and do not have to spend their money on last-minute purchases.
Businesses need to invest in robust replenishment planning software that maintains stocks at the proper level and prevents overstocking. An efficient demand forecasting software offers information on past sales data and real-time visibility into the existing stock amounts so that you know when to order for replenishment to meet demand. Proper software can assist in scaling your organization.
It is necessary to examine demand patterns and anticipate demand. Inventory planners function with contract and purchasing managers, supplier managers, supply chain financial analysts, production control, and stakeholders.
Aspects to Consider While Planning Inventory
As you supervise the inventory, you should take into account certain considerations. Both internal and external aspects influence inventory management in different ways.
Safety Stock – This is the extra amount of products that should be stored in the inventory to avoid stockout situations, and it helps to save situations against demand fluctuations.
Product Volume & Type – Past sales data can be utilized to comprehend the need for a specific item. The historical trend can be obtained from replenishment planning software. Based on the research, you can stock products to satisfy demand. The product type should also be considered for managing inventory. Certain products have a shorter shelf life and decay quickly, and inventory needs to be maintained accordingly.
Fill Rate – The number of orders a company can satisfy without facing stockouts. From this, the efficiency of a business can be understood, and businesses should aim to get a higher fill rate.
Effective Warehouse & Lead Time – Warehouses should be organized to pick items easily. Thus, orders can be fulfilled timely. It should be huge to accommodate stock from the suppliers, and the warehouse should be located such that the shipping expenses are lowered.
Lead time is when an order is placed, and the time it takes for the product to reach. Lead times are different for different products and depend on the process of manufacturing. Any changes in this aspect can result in modifications in inventory planning.
Supplier Scoring – Inventory planning is primarily based on suppliers, that is, how reliable the supplier is. A careless supplier can impact the inventory and business negatively. Companies should ensure they connect with a trustworthy supplier to prevent stockouts or delayed deliveries.
Replenishment planning can increase the retail business’s growth, offer significant profits, and lessen business costs. Businesses should maintain an optimally stocked inventory with safety stock for satisfying demand effortlessly and preventing losses.
About Fountain9
Fountain9 assists retail businesses in anticipating demand correctly. Their AI-powered replenishment planning software considers all the external and internal factors to forecast demand and replenish inventory accordingly. Organizations can maintain stock to the optimal level and meet demand at the right time.