Achieving Supply Chain Excellence: A Guide to Inventory Planning with Increff
Inventory planning is a strategic process that businesses undertake to manage and control their stock of goods to meet customer demand efficiently. It aims to strike a balance between having enough stock to fulfill customer orders promptly and avoiding excess inventory that can lead to increased holding costs and potential waste.
However, predicting demand accurately can be challenging, especially in industries like fashion with volatile or seasonal demand patterns. The rapid changes in consumer behavior, market trends, or external factors can lead to inaccurate demand forecasts, which can adversely affect a business. Therefore, it becomes extremely necessary for businesses to formulate a well-defined plan for inventory management.
It helps ensure that businesses do not run out of their core products and bestsellers, miss sales opportunities, or fail to identify potential demand in the market. So, in this blog, we will explore the challenges that businesses face while planning their inventory, the areas they need to focus on, and the right approach to inventory planning.
The Old School Approach to Inventory Planning
Fashion businesses that still rely on traditional inventory planning methods are compromising on customer satisfaction, sales opportunities, profitability, and the ability to adapt to market dynamics. In this approach, businesses analyze historical sales data and patterns to understand the cyclical nature of demand and form their strategies for the forthcoming seasons.
This involves studying sales trends over specific periods, such as seasons or holidays, to anticipate future demand during similar times, which for a business at an enterprise level will be highly inefficient, complex, losing on a lot of forecasting factors, time, and resource consuming when they do it in excel.
This includes focusing on getting rid of old styles and adding new ones without considering nuances like performance during actual live days, planning for new stores, minimum display quantity, and much more. In order to combat these problems, businesses become overly conservative in their approach.
As a result, they start storing excess inventory on hand to meet potential increases in demand or to mitigate the impact of supply chain disruptions. While this approach aims to ensure product availability, it results in higher holding costs, tied-up capital, and a long recovery time when they try to course correct to market needs.
This method is also inefficient for replenishing core products and bestsellers that make up a large chunk of a brand’s revenue. Since core products, along with bestsellers, typically sell the most in a season, they must be replenished efficiently while ensuring their presence across all stores in their network, minimum healthy stock levels, freshness, and display quantity. All these variables make it really complicated for retailers to plan their inventory.
How does Increff help in inventory planning and reordering of core products?
Here are the top challenges in ordering core products and bestsellers that Increff Merchandising Software helps businesses overcome in their inventory management journey.
- Seasonality changes: Adapting to seasonality involves adjusting inventory levels based on historical patterns and market trends. This might include increasing stock for products in high demand during certain seasons and reducing inventory for seasonal items during off-peak times. Increff identifies the seasonal demand change patterns at the most granular level, catering to the trends of each Attribute group(group of similar styles) in every store individually.
- Store sale targets: Aligning inventory planning with store-specific sales targets ensures that each location contributes effectively to overall business goals. This requires understanding the demand of each store, correcting the deviations in demand, and projecting the forward demand as a quantum of sales needed in each Attribute group in a store.
- Maintaining minimum display quantity: Balancing the need for an attractive product display with maintaining sufficient stock on hand can be challenging. Businesses need to strike a balance between visual appeal and product availability to avoid missed sales opportunities. The merchandising solution does this while ensuring the unique characteristics for every group of product at every store is captured effectively and enforced as a unit of style – size level minimum quantities
- Potential demand identification: By staying attuned to changing customer preferences and emerging trends, businesses can proactively adjust their inventory planning to capture new opportunities. Utilizing data analytics and understanding the market for a style in a location, comparing it with the sales trend of the stores in that location, the merchandising solution helps in identifying potential demand for core products and bestsellers.
- Planning for new stores: Anticipating the needs of new stores involves considering factors like the location’s demographics, local market conditions, the store’s size, its display constraints, and its potential demand. This ensures that the inventory is tailored to meet the specific demands of each new location.
- Actual live days: Considering the actual operational days of a product at a store helps in identifying the true potential of a style leading to optimized inventory levels. The Merchandising solution completely captures this and ensures that businesses factor in variables like holidays, special events, and store-specific factors to avoid understocking or overstocking during specific periods.
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