This is an excerpt from Ryder E-commerce by Whiplash’s latest ebook “How to turn surplus into success: Navigating the excess inventory dilemma” by Inventory Planner, the intelligent and reliable demand forecasting solution.
Inventory planning may sound like a niche solution, but the truth is, it plays a pivotal role in your whole supply chain and cash flow. It solves some of the major challenges of inventory management – which inventory management solutions alone can’t handle.
However, inventory planning and inventory management are often confused, and the terms are mistakenly used interchangeably.
This means merchants (understandably) struggle to choose the right solution for their e-commerce business – or get it wrong entirely.
So let’s dive into the key differences and benefits of an inventory planning system.
An inventory management system helps you to track your goods throughout your entire supply chain, from purchasing to production to end sales and fulfillment.
In contrast, an inventory planning system gives you reliable buying recommendations based on advanced demand forecasting. It helps you order exactly the right amount of stock, at exactly the right time. It stops you from trapping your cash in excess or slow-moving inventory and puts an end to ‘out of stock’ signs. It’s a proven tool to save time, adapt to changing markets, and protect cash flow.
Knowing how much inventory of each product you need to meet demand – without tying up your cash in excessive inventory – is a major challenge for SMBs and e-commerce brands. But it’s one an inventory planning system solves.
Due to long-term global supply chain disruptions, it can take much longer to receive goods from suppliers, which leads to lengthy customer delivery times. To ensure your goods arrive on time, you need to plan smarter. An inventory planning system factors in the changing lead times from your suppliers, resulting in optimal stock cover.
High shipping costs due to container freight rates have a massive impact on your profit margins. An inventory planning system with container loading optimization functionality will make sure you maximize the space for shipping to make your money go further.
Make your purchasing process easier (and more efficient) with an inventory planning system telling you which items to order, how much to order (down to the last unit), and flag up when a purchase order needs to be placed to avoid stockouts.
Smart product insights are a necessity, an inventory planning system offers forecasting-related insights, such as forecasted profit, past lost revenue, forecasted lost revenue due to out-of-stocks, overstocked items, and more.
An inventory planning system with multi-warehouse forecasting helps you allocate the right inventory to the right warehouse. How? By ensuring you purchase the right goods and the right quantity upfront. Automating the complex calculations of future demand for multi-locations saves time, improves accuracy, and avoids warehouse transfers and overstock or out-of-stock issues.
In a turbulent retail landscape where trends can (literally) change overnight, merchants have to make fast, informed decisions about which inventory to order, when to order it, and what quantities to choose. A leaner inventory boosts cash flow and gives the business a buffer to fall back on as consumer demand remains unpredictable and an economic downturn takes hold.
In a turbulent retail landscape where trends can (literally) change overnight, merchants have to make fast, informed decisions about which inventory to order, when to order it and what quantities to choose.
Real-time, reliable forecasting data is critical – but it can’t be gleaned from a spreadsheet. It’s a realization that online furniture retailer, FurnitureBox, came to as the business grew rapidly.
“One of the reasons we got Inventory Planner was for its ability to constantly update your data and learn from your sales history, with one eye on emerging trends. But it doesn’t just give you all the data and then you have to decide what to do with it. It goes the extra mile to analyze the data and give you sales forecasting and buying recommendations for every variant that you can actually trust. It’s incredible.” says James Ewens, the brand’s Head of E-Commerce.
The business added Inventory Planner to its tech stack to stay one step ahead of sales demand and eliminate the risk of tying up its cash in overstock.
James says, “We only invest in inventory that we are confident will sell. Inventory Planner’s reporting means we can see when sales of an item are slowing down or picking up, and our buying recommendations are adjusted accordingly. We always have the right inventory at hand – we don’t face the constant threat of overstock or running out of stock.”
As a result, FurnitureBox now holds a leaner inventory, which has boosted cash flow and given the business a buffer to fall back on as consumer demand remains unpredictable and an economic downturn takes hold.
Want to learn more? Check out the rest of our ebook on how brands can effectively tackle excess inventory and create more opportunities to engage customers:
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