Do you know about inventory planning online? If not, read on. You’ll soon find out the benefits of using such a tool to manage your inventory. With accurate inventory data, you can make the best judgment calls about stock levels, minimize costs, and provide a better customer experience. Then, you’ll know how to allocate your resources to maximize your bottom line. It’s time you learn how to use inventory planning software in your business.
First, inventory forecasts can be very simple or very detailed. To make your first forecast, input past sales data into an inventory planning tool. Use sufficient detail so that you can see seasonal fluctuations. Then, use patterns to shape your forecast, such as reorder points, which may vary by season. It’s important to know the demand patterns to make accurate predictions. Otherwise, your business might end up paying rush fees to catch up.
Secondly, consider the reorder point for your products. This is the point when your inventory level is low enough that you need to order more. If your inventory level is zero, your inventory planning may be flawed. If your sales cycle is longer than your lead time, you need more inventory than you currently have. A zero reorder point indicates that your inventory level is too low and you’ll need to place an order soon.
Third, use EOQ to reduce holding and ordering costs. You can do this by breaking your purchase orders down into groups of SKUs. This method works well if you need to replenish inventory frequently, but it’s also important to keep in mind that having too much inventory is as bad as having too little. Excess inventory can damage your products or result in storage problems. You can also use a different method to minimize storage costs if your items are perishable.
In addition, lead times should be factored in. While an average lead time is an important factor to consider, it’s important to account for any unforeseen delays. For instance, you should build in a buffer of time for unforeseen events, including shipping delays and earthquakes. You must also take into account factors out of your control, such as global pandemics. These things could affect your supply chain and cause it to go off track.
Aside from maximizing your sales, inventory planning software should also make sure you’re not overstocking your products. The ideal system should also highlight order suggestions that are more/less than what you need. With the right technology, operative buyers can make rational decisions based on accurate data without the hassle of manually calculating optimal quantities. As the cost of goods sold at retail is dominated by the cost of goods sold, your operative buying team can exploit rebates and stock up before price increases.