Inventory planning greatly affects a company’s profits as it directly contributes to maintaining its supply chain efficiently. It can help avert unnecessary spending on items not needed, create a positive customer journey, and offer sales whenever useful or possible. Preventing stockouts, minimizing overstocking, and improving processing are the key ways to improving inventory planning. Many eCommerce companies could use the help of an inventory planner to improve their order fulfilment process.
What is an Inventory Planner?
It is not uncommon for retail businesses to have 80% or more of their cash invested in inventory. To remain operational, businesses must keep a supply of goods on hand at all times. However, a company must assess its inventory management process by utilizing the common methods listed below.
- Utilizing a demand forecasting formula
- Performing regular stock counts
- Implementing software to automate manual processes
- Proper training and accountability
The supply chain management strategy of any company includes inventory planning, along with accounting, order management, customer management, and warehouse operations. Forecasting demand and determining when and how much to order inventory are two of the most important aspects of inventory planning. It helps businesses meet demand while reducing costs when done correctly.
Loyal customers are built on consistent service levels. eCommerce companies must take the following three steps to establish stable inventory planning.
- It involves using historical key performance indicators (KPIs), sales data, and other variables to create data-driven estimates of demand.
- Determine the best suppliers, automate purchase orders, and reduce the cash held in slow-moving products to reduce costs.
- Optimize order fulfilment routes by storing the right quantity of products in the appropriate location with multiple inventory sites.
The Fundamentals of Inventory Planning
Any company’s profits and cash flow are directly affected by inventory planning. eCommerce businesses can keep their manufacturing process running and save money on expensive purchases thanks to the system, which prevents stock-outs and offers discounts for regular and bulk orders. The appropriate mix of process, technology, and people is necessary for effective inventory planning.
1. The Technology of Inventory Planning
To avoid overstocking, eCommerce businesses can use software that automatically places orders to ensure that they have enough stock on hand at all times. For forecasting inventory levels, digital planning systems use data from previous forecasts and current inventory levels. eCommerce businesses can grow if they use the right software.
2. Roles and Responsibilities in Inventory Planning
Inventory planners plan and forecast inventories that collaborate with supply chain financial analysts and contract/procurement management leaders.
3. Policies, Procedures, and Processes for Inventory Planning
eCommerce businesses can use inventory policies to guide their planning and inventory management activities. The inventory planning processes and policies must be defined, documented, and communicated throughout the planning and the supply chain. When it comes to how businesses pick and store products, their procedures can be as diverse as how they use enterprise resource planning and other inventory software. In the distribution and warehouse centre, inventory checklists and procedures can help businesses guide their employees in handling inventory.
Benefits of Inventory Planning
An inventory planner can offer many benefits. Businesses can realize the following advantages when they have proper inventory planning in place.
- Reducing or eliminating stock-outs is essential.
- To save money, eliminate excess inventory.
- Make sure your stock is optimized so that you can quickly identify products that need to be discounted.
- Remove perishable or obsolete products from the shelves by rotating them to the front of the store.
- Inventory movement can be used to increase cash flow. Fast inventory turnover necessitates inventory management for small businesses, so it is critical.
- Efficient production or strong sales can boost profits.
- The warehouse or stockroom can be accessed quickly and easily.
- Reduce the risk of theft and exploitation. Raw materials and other goods can easily be stolen if not tracked properly.
- Maintaining a surplus of the same product and preventing obsolescence are two of the most important aspects of inventory management.
- Take advantage of supply chain inconsistencies. Restocking may be delayed due to transportation issues or power outages affecting suppliers. Customer service levels assure that production and sales time is not lost due to stock-outs if businesses have a well-planned supply chain.
What to Look for in an Inventory Management System?
On-premise implementations may provide additional security and a sense of security from having inventory planning software. However, cloud-based inventory systems are now available for a wide range of situations. Key features include the following:
- Barcode and point of sale (POS) technology track sales.
- Control and management of stock locations
- Managing multiple sales channels while avoiding stock oversupply
- Supply chain planning for brick-and-mortar and online stores
Get Actionable Information by Using an Effective Inventory Planner
A company’s success or failure depends on how well it manages its inventory, and an inventory planner is a critical part of this process. The ability to keep track of the stock at all times is essential to any business’s success. Decision-makers understand that they must have the suitable tools to manage their stock effectively. NimbusPost provides a set of native tools for managing cycle counts and safety stock alongside tracking inventory across multiple locations. With distribution requirements planning and demand planning features, eCommerce businesses can find the right balance between demand and supply for their entire company.
