Top 6 Inventory Planning Challenges and Solutions to Overcome Them
Inventory planning software is essential in operating a smooth supply chain. Inventory planning is the process used to identify the amount of inventory you have on hand, analyse your upcoming demand, and decide how much to produce or purchase to meet consumer demand.
• Effect of improper inventory planning on businesses
• How to avoid inventory shortages
• Inventory management challenges
• Benefits of inventory planning software
What is Inventory Planning?
Inventory planning identifies and plans for the amount of inventory you need in order to meet consumer demand. With inventory planning, you are able to align your sales targets with your production capacity.
With inventory planning software you can have accurate inventory reports, understand raw material requirements, gauge product needs for individual locations, rotate stock faster, process orders on time, and more.
Failure to meet consumer demand directly affects your sales and reputation. Imagine the demand for your product has increased, but you don’t have enough inventory available in the warehouse. These challenging situations result in unsatisfied, and even lost, customers.
To avoid these circumstances and meet market requirements it’s necessary to have accurate predictions. Forecasting plays avital role in supply chain management. Using inventory forecasting software, you can identify future changes in demand and plan your production accordingly.
In 2016, Nike had an increase in the sale of discounted items. This was due to inventory managements problems, and it resulted in a decline of Nike’s gross margin. Nike solved this issue by implementing inventory management software.
Both stockout and overstock situations have negative impacts on your company. Inventory forecasting software is a data-driven software that predicts the amount of inventory you’ll need to have to meet consumer demand, so you can avoid these negative situations.
Inventory Planning Challenges
Continuously changing demand: There are fluctuations in consumer demand due to factors like seasonality, fashion trends, and changes in product pricing. Therefore, the challenge is to be aware of future circumstances and plan your inventory accordingly.
Low visibility of inventory levels: It’s challenging to locate and identify the right inventory in warehouses if the data isn’t recorded. It causes various issues, such as delayed or inaccurate shipments. Having maximum visibility of your inventory is essential for efficient warehouse operations that prepare for upcoming demand.
Manual tracking: Following traditional techniques to manage inventory records is time-consuming, error-prone, and not secure. Using software brings consistency in tracking inventory operations.
Inventory loss: Products are often damaged, spoiled, or stolen, which further affects the supply chain. Therefore, to identify and resolve potential problem areas, it’s essential to have clear visibility of your inventory.
Delayed productions: Creating an accurate production plan is essential for successful supply chain management. If this planning goes wrong, it affects sales and customer relationships.
Lack of coordination between teams: If the departments lack effective communication, sales and production are affected. Using software promotes collaboration where team members are able to share ideas for improvement.
Benefits of Inventory Planning Software
Accurately forecast future demand: Inventory forecasting software enables you to predict the inventory you need on hand to meet demand. Changes in demand due to seasonality, consumer trends, and other parameters are considered while forecasting inventory.
Avoid overstocks and stockouts: Inventory forecasting software makes you more aware of your product needs. This enables you to plan accordingly and deliver the correct quantity to the right place on time. Producing the correct quantity prevents overstocks, and you don’t have to face inventory loss.
Increases revenue: A decrease in the loss of sales and inventory increases the profitability of your business. By forecasting inventory needs, you can understand the demand patterns and implement strategies to increase product sales. You can easily make informed decisions such as how to allocate inventory across different locations to speed up product delivery and reduce shipping costs.
Carry out other operations effectively: Using inventory management software, you can track all inventory operations, from manufacturing to product delivery. The automated software simplifies the supply chain process.
Inventory planning is essential in supply chain management. Moreover, traditional inventory planning techniques and manual documentation can cause disruptions in the supply chain process. It’s beneficial to adapt to the latest inventory forecasting software to optimize your supply chain.
Avercast offers forecasting solutions to numerous industries, including, food, clothing, and manufacturing. If you’d like to know more about how Avercast can improve your business, please contact our experts today. We would love to give you a free demo and share specific details about how we’re sure to benefit your company. Contact the Avercast team today!