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.
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.
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.
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.