Inventory Planning Basics: Advantages, Challenges, and How To Overcome Them

We’re pretty sure that you’ve heard about inventory planning before. But how much do you know about it? In this guide, you will get familiar with it, and you’ll learn more about the advantages and challenges a business may face when putting it into practice. So let’s dive into it!

What Is Inventory Planning?

The inventory planning process is part of a retail business’s asset and refers to holding stock in warehouses or stores. Also, it has a crucial role to supply chain management since it affects order management, inventory processes, warehouse operations, accounting, and customer satisfaction.

Managing it successfully equals having an accurate quantity of goods at the right time and in the right location.

Inventory Planning Flow

The planning process consists of different steps in the lifecycle of the stock. Specifically:

1. Purchase Inventory: This step includes the order of the inventory which will be made according to the data collection
2. Store Inventory: Businesses store items either in a physical store or a warehouse.
3. Make Use of Inventory: This step includes selling stock or using it as raw materials to manufacture goods or repair items.
4. Track your stock: By tracking stock you’ll get the information needed regarding what products are required and when to reorder them.
5. Reorder Goods: According to the data collection, a business can replenish its inventory.
6. Forecast: Use an inventory management software that meets your company’s needs to forecast stock levels.

Inventory Planning Advantages

There are multiple advantages that an implemented inventory planning may offer to a business:

Order Fulfillment Improvements

Inventory planning equals stock availability of the right quantity and at the right time. This way, the order gets fulfilled on time while also the customer’s needs are instantly met.

Enhanced Customer Service and Satisfaction

By maintaining enough quantity of stock, a business can ensure the product availability of best seller items. Thus, customer satisfaction will be enhanced.

Smoother Workflow

With inventory planning, the stock gets ordered on time while all the steps in the stock management process are planned. This will positively affect employees because the workflow will be more organized and managed easily and smoothly without last-minute errors.

Increased Business Profit

By correctly planning the restocking of inventory, a business can avoid product waste, and decrease the extra costs of managing excess stock. In addition, the warehouse expenses will decrease as well as the expenditure of capital. Thus, the profitability will augment.

Inventory Accuracy

With accurate inventory management, a business will have the ability to know what is in stock and order products that are expected to have increased demand.

Keep Ahead of the Competition

Market trends and seasonal factors have a crucial role in a business’s profitability. Inventory planning will help you forecast and plan to restock product goods to provide the company’s products based on seasonality and market trends.

Challenges To Face

As mentioned above, inventory planning can help a business improve its operational and stock management processes. However, there are a few challenges that you should be aware of.

1. Complexed Process

The inventory planning process might be difficult to understand for inexperienced employees. That’s because it includes a lot of different procedures and responsibilities for those that handle it. A business should choose an order management software provider with an easy-to-use interface that may also demonstrate the product for better understanding to ensure minimizing human errors.

2. Insufficient Data

It also requires data access for multiple product codes and maybe multiple warehouses. The collection of these data and the creation of reports might be a tricky task. If there’s a lack of accuracy in the data collection, then this will lead to an unsuccessful inventory forecast that will affect many business sectors.

3. Team Coherence

Planning inventory correctly is affected by the cooperation of different teams and departments in a company. Specifically, successful inventory planning consists of the collaboration between the management team – which decides upon the KPIs, the accounting team, which keeps track of the stock, and the warehouse operators or project managers.

Inventory Management Planning With Megaventory

Inventory planning can become an easier process when selecting the right stock management software that meets these kinds of business needs too. The selection of the ideal inventory management might seem quite difficult due to the many product options on the market but here are some features that should be provided as a minimum if one wants a complete solution

1. Inventory tracking in multiple locations and companies
2. Barcode scanning capabilities and batch number tracking
3. Multichannel management 
4. Stock, purchase, and sales reporting
5. Inventory planning of course

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Note that this isn’t done natively in Megaventory but rather with a partner. Do you want to learn more?