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Signs Your Inventory Planning Needs Attention
DotActiv TeamNov 8, 2016 5:27:36 PM2 min read

4 Signs Your Inventory Planning Needs Attention

Inventory planning is about taking all factors into account to hold just the right amount of stock at the right times. Get it wrong, and capital will be held up in the form of excess inventory or worse, you will have to turn customers away because you ran out of stock.

According to IHL Group study “overstocks and out-of-stocks cost retailers $1.1 trillion globally in lost revenue”.

Are you guilty of poor inventory planning? Do you have capital tied up in slow moving stock for no good reason? If you’re unsure about whether or not yours needs attention then these signs might be helpful:

Four Signs Your Inventory Planning Needs Attention:


1   |   You don’t have extra storage space to bargain with  

Four-Signs-Your-Inventory-Planning-Needs-Attention-ou-don’t-have-extra-storage-space-to-bargain-with--.jpgPlacing large orders is not always a bad thing, in fact when there is a good reason then it can put your business in a position to make more margin. Consider the example below:

Your buying team needs to place an order on a perishable item. They know how much storage space is available, how long it will take to sell the stock, where the stock will sell best and when the stock expires. All of this supporting information puts the buyer in a position to negotiate a winning deal with the supplier. It will be a shame if the only thing holding your business back from better deals with suppliers is storage space which is needed to store the stock.

2   |   Rising inventory levels and slow moving stock

Four-Signs-Your-Inventory-Planning-Needs-Attention.jpgIf you have stock which sits on shelves or in storage for long enough to push the boundaries of expiry, then you have a clear sign that something needs to be optimised. Slow moving stock often results in “forced” discounts, wastage or rising inventory levels in the case of non-perishables which is less than ideal.

When reviewing your inventory the stock to sales ratio is a key statistic for measuring whether or not the business is overstocked. When your stock to sales ratio rises but sales aren’t increasing accordingly, then you may be running into trouble.

3   |   Inventory management is not integrated and data-driven


Inventory planning can’t be efficient if it’s done in isolation. Assortment planning, planograms, promotion planning and other category management functions are completely dependent on inventory planning and visa versa. This interdependency means there needs to be a two-way data exchange between the functions.

Having the right information transfers at the right times will enable you to plan for the needs and wants of your customers efficiently.



4   |   Out of stocks happen too often


It's not unusual for a retailer to experience an occasional out of stock. But if it occurs frequently, it might be a sign of poor inventory management capability. Poor availability results in dissatisfied customers and weakened financial performance over the long term.

Your inventory plan should anticipate how much stock you will need, providing you with a clear picture of how often you need to replenish each item without running out of stock.



To ensure shoppers walk away from your store having made a purchase while feeling happy about their experience, you need an integrated environment which optimises your inventory management.

DotActiv's category management software can improve efficiency, reduce your management and planning time when integrated with your inventory management software. Our software exchanges data to and from your inventory software in an automated way which enables you to spend more time using your data and less time processing it.




DotActiv Team

The DotActiv team comprises category management experts lending their retail experience and knowledge to create well-researched and in-depth articles.