Supply planning is about managing and planning the inventory supply to meet customer demand. It’s the entire planning process, which includes distribution, manufacturing, and procurement operations according to demand forecasts, capacity constraints and material availability.
There are a variety of gaps in the supply planning process where errors typically occur, but there are also concrete ways to navigate through them and ensure your supply planning is strong and accurate.
If you don’t plan properly, you will run into a few problems with your inventory. These may include:
To make sure you plan the right amount of inventory, consider using some supply chain planning tools that will help you forecast and analyze data, so you can accurately stock shelves and even consider the right time of year for a sale. Here are the three ways you can tighten up your supply planning and work through the gaps in your process!
Gone are the days of doing inventory checks by walking around with a pen and paper and tallying up what you have in stock. Digitizing your supply planning is the way to go, and has already helped revolutionize one legacy industry. By letting technology steer them, this HVAC enterprise was able to minimize obsolete inventory and improve forecast accuracy.
The tools are out there so you can go completely digital with your supply planning. While you will always want to look over the data produced by a computer, take the heavy lifting off your team’s shoulders so you can focus on what computers don’t do best — interacting with customers and creating a pleasurable experience for them when they are shopping at your business.
There are a variety of supply chain planning software tools that you might find beneficial to your organization.
Predictive analysis and predictive forecasting are two types of tools that you can use to make sure you are doing your supply planning correctly. To successfully demand forecast, you will want to use each of these tools.
Think of this as the type of analysis where you are looking at customer behavior. What trends does history show regarding the patterns of purchases people make? This is the type of data that is going to show you your spike in winter gear in cold weather and bathing suits in spring and summer. People have a history of buying certain materials at a certain time a year.
Use predictive analysis to also help you decide when to put items on sale. Think of this like the after-Christmas sale on wrapping paper and ornaments. There are plenty of people who shop the day after Christmas to get discounted items to use at next year’s holiday season. In this case, it would be better to sell what you can, even at a discounted price, as it gives you more room to stock your inventory for items you will sell in the spring at full price. Don’t look at sales as a way you are losing money, think of them as a way you can help sell inventory that isn’t really in season or in style anymore.
Similar to predictive analysis, but this type of forecasting is going to analyze the materials themselves. This can be vital when you are selling batteries or selling products that contain batteries, so you can manage the shelf-life and not have any batteries leaking on your shelves. While the trends in your customers habits might be driven by emotion, the items themselves also show patterns. Let historical data help guide you while you do your supply planning. Understanding forecastability will set your enterprise apart from all the others.
Don’t forget to apply some human oversight to the forecasting tool. For example, the global pandemic has changed the travel industry. If you historically sold a certain amount of a product that is used by passengers when flying, like luggage tags, apply some knowledge and understand that next year you probably won’t sell the same amount as the world recovers and the travel industry gets back on its feet.
Since inventory planning is so important make sure one of the solutions to avoiding gaps is to circulate your inventory. You want to avoid grabbing the first items off the shelf to fulfill an order. If you have a stack of batteries on the shelf, when someone orders a battery make sure you are giving them the oldest battery. This will ensure you can sell all batteries before their shelf-life expires.
If you pick a random one off the shelf, you run the risk that the newest battery will ship out. In this case, you might find that your older batteries end up obsolete. You won’t be able to sell these batteries, not because you haven’t had orders for them, but because you didn’t rotate your stock ensuring you sold them while their shelf-life was still valid.
This works for all types of consumable items that eventually go bad — batteries, items with batteries inside them, and most food products.
If you have been struggling with supply planning, that’s ok — we’re here to help! Reach out and contact our team today, as we have been working in the supply chain industry for years. We have seen it all, and can help you avoid the common pitfalls of inventory management.