To meet consumer demand, inventory planning relies on having the appropriate stock on hand at the appropriate time. Costs are also managed, and waste is reduced by having a good inventory planning system. Companies with best-in-class inventory planning techniques avoid making wild guesses about how much inventory to purchase and instead use sophisticated inventory planning tools to maintain a steady flow of raw materials, items that are still being manufactured, and finished goods as they move from the manufacturing process to the consumer through a variety of distribution channels.
A good inventory planning tool is capable of helping businesses understand the causes underlying emerging trends in inventory planning so they can decide whether it makes sense to adopt them early or wait for someone else to clear out the uncertainties.
Businesses use inventory planning to ensure they always have a consistent supply of commodities, whether raw materials, finished goods, or other operationally essential assets.
Successful business owners and managers typically use a combination of inventory planning procedures to create an effective system that navigates inventory level, location, pricing, logistics, and supply chain elements. The inventory planning process is time-consuming for manufacturers and businesses and involves numerous users and intermediaries.
The Necessity of Inventory Planning
Inventory planning provides several benefits for firms. Businesses shouldn’t ignore the importance of inventory planning because it can increase sales while lowering waste and losses. The following are some of the critical benefits of having a proper inventory planning for businesses:
- Reduce stock outs by placing new orders only when necessary.
- Reduce logistics paths and combine orders to lower shipping costs.
- You can eliminate needless locked-up resources by ordering merchandise with market demand.
- Ensuring each store has a replenishment strategy that can minimize the costs associated with store transfers.
Inventory planning works to maintain a consistent flow of goods across the supply chain by strategically planning replenishment orders & procurement plans. Without efficient inventory planning , companies are at risk of running out of stock which can lead to losing both money and brand reputation. A manufacturer’s output may be delayed if retailers run out of popular goods or raw materials or vice versa. Customers might change brands, which could reduce brand loyalty and cause lost sales and money.Planning for inventory will also help to save money by avoiding the need to retain excess inventory which can lead to overstocking issues.
Trends in Inventory Planning Businesses Should Follow
Whatever industry you’re in, staying current with inventory planning trends is crucial. Many of these trends are intended to aid businesses in determining where to allocate their resources. In contrast, others will increase stakeholder buy-in, improve the use of data, and provide a growth strategy.
Agile Inventory Planning
Inventory planning in contemporary times is made to be as flexible as possible to meet any fluctuations in demand instantly. Businesses can get clear visibility into the amount of stock and have information about where the stock is located precisely. This makes tracking easier and shipping times can be minimized by placing inventory in locations where it is in high demand. The items about to perish are also kept in accessible locations for selling before other goods of the same category.
Machine learning and Artificial Intelligence for Improvement
Computer systems that use artificial intelligence (AI) and machine learning (ML) continuously improve as they gain more knowledge about a company’s inventory planning system. These programs can uncover flaws that lead to higher costs and better integrate inventory levels and movement across intricate networks. AI/ML, for instance, may demonstrate that the packing of a specific product causes higher-than-average shipping damage rates.
As firms use IoT technology, AI and ML become more potent because they have more data to analyze.
Complete Connectivity via the Internet of Things
The IoT is one of the most significant advancements in inventory planning. Cloud technology is integrated across various places through the internet of things (IoT). Computers can talk, but almost everything in a commercial space can connect to the local network. A location’s IoT network can be expanded to include scanners, loading docks, equipment, and even the actual goods.
Data Analysis for Predictive Picking
Large amounts of data can be collected, analyzed, and used to better warehouse picking rates. Analysis can reveal products frequently bought together or that individuals with particular buying habits tend to acquire.
Pickers can save time by placing products that are frequently mixed close to one another. Sometimes, it is even possible to pick up orders before they are placed, increasing picking productivity and enabling even quicker delivery timeframes.
IoT, ML, and AI are essential to data analytics. More companies will be able to start predictive picking as these three develop.
Automated Safety Stock Calculator and Planning
Safety stock is the additional stock for avoiding out-of-stock losses or for fulfilling a sudden rise in demand. Optimum safety stock allows businesses to proceed as per plan. Safety stock serves as insurance when there is uncertainty in demand. The supplier might deliver products late, or the items might be of poor quality, or there might be a rise in demand as competitors do not have enough stock.
In modern times, safety stock is calculated automatically through inventory planning software depending on the lead time, service level, and forecasted demand. Safety stock is also calculated based on the consumption history in the previous month.
About the Company
Fountain9 helps retailers meet customer demand at the right time with proper inventory planning. Their artificial intelligence (AI)-enabled inventory planning tool, Kronoscope, can precisely estimate demand for each SKU item and identify the quantities that need to be stocked to fulfill demand satisfactorily. Businesses can meet customer expectations and generate more substantial money with the help of this software.