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:
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.
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.
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.
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.
Conclusion
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.