Inventory planning is a key aspect of supply chain management. Even with modern planning systems, the right inventory planning techniques need to be implemented to streamline the entire planning process.
Companies understand the importance of planning, especially as an unexpected or unplanned event – such a major promotion resulting in out-of-stocks or the inability to move certain items off the shelves—threatens their business’ growth.
The main issue is defining the right inventory policy and enforcing it. As the number of items is greater and the customer’s supply chain is longer or more complex, businesses find it difficult to plan inventory and therefore suffer from the effects of out of stocks and overstocks, which harm sales, damage company reputations and service levels. They also weaken profitability due to high storage costs, unnecessary inventory transfers, expensive and urgent deliveries, inventory write-offs and adjustments, and more.
Companies need to define and enforce their inventory policy: On one hand, they should have enough inventory, taking into account unexpected events, sudden increases in demand, delays, or out of stocks. On the other hand, surplus stocks could harm the efficiency and profitability of the company. Even in companies which have an inventory policy, most find it difficult to enforce on a daily basis.
However, with the right solution and a policy which is regularly enforced, it is possible to overcome inventory planning challenges, optimize inventory and accelerate growth