Inventory Planning Software is Essential in Overcoming the Effects of COVID-19 on Retail Supply Chain
Inventory planning software is a valuable tool for businesses to use to forecast their product demand by considering various elements that affect sales. Check out why inventory management software has become the preferred choice for most retail industries since the COVID-19 pandemic.
HIGHLIGHTS - Effects of COVID-19 on
• 94% of Fortune companies are facing supply chain issues
• 75% of businesses have experienced a negative impact on sales
• Online sales have increased by 6-10% points (all product categories)
• Recommendations for supply chain management
• How inventory planning software is essential in shaping demand
Companies are still facing the COVID-19 challenges, i.e., fluctuating sales. In addition, the pandemic has disrupted supply chains due to transport restrictions and lockdowns in major parts of the world. Therefore, there’s a need to implement extraordinary measures to survive conditions caused by the pandemic.
The most common question that arises in business leaders’ minds at these situations is, “What and how much should I produce, and will it effectively meet market demand?”
Demand planners and suppliers are now aware of the unpredictable nature of the market and are turning to technology to find a solution.
EFFECTS OF COVID-19 ON CONSUMER BEHAVIOR
Consumers are shifting toward online purchases rather than buying goods in physical stores. So, it has become essential for retail companies to make a strong online presence for themselves. In addition, it’s observed that the percentage of products returned from online purchases has increased since the pandemic. So, companies need to consider these factors in order to better manage their inventory.
Inventory management software integrates with your ERP system to keep records and make accurate projections of demand using real-time data models. As a result, demand planners can track returned orders efficiently and take measures to reduce the rate of returned products to prevent revenue loss.
EFFECTS OF COVID-19 ON RETAIL
Retailers and eCommerce companies are one of the most affected sectors due to the pandemic. Some products are experiencing peaks in demand, while others have seen a decrease in sales. Both situations present the industry with issues.
For instance, at the beginning of the pandemic, the demand for hand sanitizer greatly increased, leading to stockout situations. As companies increased their production and many new brands stepped into this business, it resulted in excess inventory. Some stores still have a ‘special’ on hand sanitizer, as they are still trying to get rid of their surplus.
Uncertainty in product demand and other elements has disrupted the supply chain. Consumer demand has changed due to work and travel restrictions, lifestyle changes, and lockdowns. It’s a hard time for demand planners and suppliers to find balance in supply chain.
RECOMMENDATIONS TO STABILIZE YOUR SUPPLY CHAIN
Consumer behavior is changing rapidly, so companies can’t depend on historical data alone to predict the market. Instead, retailers need effective forecasting tools that adapt to current situations. Some industries might be using traditional forecasting methods to make sales projections, but retailers can’t make hundreds of inventory management decisions based on those techniques. So, what’s the solution?
Advanced forecasting algorithms, Machine Learning, and Artificial Intelligence have enabled demand planners to generate forecasts that react to current and future trends. As a result, companies can adjust safety stock and time in order to meet the requirements of changing lead times.
STRATEGIES FOR RETAIL SUPPLY CHAIN
• Generate forecasts: That’s how you can start planning your business operations. Forecasts give you data-proven results. Use inventory forecasting software that delivers results based on real-time data.
• Create plans for various scenarios: Plan strategies for scenarios based on different demand predictions. Compare results to get the most accurate forecasts. Plan your operations accordingly.
• Plan for excess demand: Calculate the safety stock you need to keep on hand if the demand increases.
ADAPT TO THE NEW NORMAL
Making rapid decisions and immediate planning is the current approach needed to sustain business operations. There could be additional changes in demand due to the pandemic. Product demand can increase or decrease depending on various factors such as lockdowns, transportation restrictions, changing government policies, and future economic conditions. You need to understand these conditions in order to effectively plan your sales.
SHAPE THE NEXT NORMAL
Advanced technology has enabled developers to build efficient inventory management software that accurately forecasts market needs. As a result, the majority of businesses are adapting inventory forecasting tools to shape their demand.
Inventory planning software doesn’t just forecast sales; it integrates with your ERP system to generate results based on real-time data. You don’t have to manually keep an eye on your inventory levels. Inventory planning software is automated and informs you when and how much to produce to satisfy consumer needs.
To learn more tricks to survive the impacts of COVID-19 on your business, contact the Avercast team today! Avercast has decades of experience in helping businesses to optimize their supply chain.