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Inventory planning is an essential part of operating a successful brand. It refers to the procedures and processes that affect analyzing, forecasting, ordering, and distributing the goods that your business sells. It goes without saying that having the right amount of inventory at the right time and location will reduce the costs of inventory handling and better meet your customers' demands. Who wouldn’t want to decrease costs and optimize sales and customer satisfaction all at the same time?
Still, many companies struggle to get it right. In fact, 32% of businesses in the consumer goods industry reported difficulty forecasting demand as one of the most vulnerable parts of their value chain. Another 26% of businesses cited low inventory or production insecurities. As the prevalence of stock-outs keeps rising (250% in 2021 compared to pre-pandemic levels), it is more vital than ever to get your inventory planning in good shape.
In this article, we’ll cover common pitfalls many consumer brands and retailers encounter when going about their inventory planning. We’ll also share with you our best advice to get it right.
A solid process for inventory planning is about much more than increasing stock accuracy. It saves you time and gives you a competitive advantage in the market by increasing your customer satisfaction, ensuring you carry the right stock, and allowing you to free up capital to grow your business faster. The perks, or frankly essential business values, that efficient inventory planning poses are evidently many:
Though efficient inventory planning offers key advantages for any retailer or consumer brand, getting it right can seem like a dire task. Forecasting sales and inventory requires vast amounts of data, often dispersed across multiple systems. In addition, advanced models are needed to calculate how sales and inventory will develop. Lead and production times are oftentimes multiple months, meaning companies need to plan their purchases long ahead. Especially for large and medium-sized brands and retailers inventory planning comes with increased complexity. Operating across multiple channels and locations creates many different streams of data, making it harder and more time-consuming to estimate the total production needs. Shifts in the market affecting one or all of your channels add additional complexity to the process.
In effect, inventory planning poses a lot of complex questions: How do you account for products that have long been out of stock when calculating their sales rate? How do you account for products that have been sold at a reduced price when forecasting future sales at full price? Many companies simply lack the competence to meet these complex questions in-house and are left to rely on guesswork, struggle through heavy excel sheets, incomplete data, and misalignments in budgets and revenue goals.
Consequently, this leads to many brands sitting on misaligned inventory, missing out on sales due to out-of-stocks, and at the same time having a lot of capital tied up in deadstock. Relying on spreadsheets is simply no longer the best option. Brands must choose solutions that can evolve to meet the needs of their customers in a rapidly changing market.
Achieving optimal inventory levels doesn’t happen by accident. The most successful brands use inventory planning software to get it right.
Inventory planning software offers a much more reliable, flexible, time-efficient, and accurate solution to ensure all the key advantages of inventory planning discussed above by automating, streamlining, and simplifying such complex processes. It reduces human errors and offers direct integrations with your other key systems to combat faulty data. It will give you more reliable forecasts based on real-time data and more flexibility to adjust your purchase and inventory levels based on changing needs.
A solution like Madden Analytics lets you track and analyze historical and current data to gain insights on performance, and most importantly to estimate future demand. It will:
It will simply give you structure, intelligence, and automation in your inventory and buying planning to save you time - and make you money.
Madden Analytics is an advanced and intuitive tool that will help take your business to the next level. It will allow you to reach your inventory and sales goals while also optimizing and streamlining the process.
Do you want to learn more about how Madden Analytics can help you with your inventory planning? Book a demo and we’ll be in touch!