One of the toughest supply chain strategies to implement is proper inventory forecasting and management. Fluctuation in demand, buying habits and production delays can add to the complexity of this task. The goal is to have enough inventory on hand but not overspending on the storage or overproduction which adds to cost as well.
Technology has to be ingrained in your strategy to stand a chance of accurately managing your inventory across your supply chain. The most successful companies currently riding the recent eCommerce wave, have used technology to predict their inventory needs, allowing them to reduce overhead, while maintaining the standards they have created to ensure customer satisfaction.
Setting Your Sights On A Moving Target
Inventory forecasting can feel like a constantly moving target. However, the importance of forecasting well can’t be overstated. Aside from the obvious cost implications, customer satisfaction is increasingly focused directly on time to delivery. Any delays jeopardize the speed to which your customers receive their goods and that can mean the difference between continued patronage or losing future sales to a competitor.
Inventory forecasting and control also insures accurate reporting that allows sales efforts to know precisely what is available or when it will be available next. A proper inventory management system will also allow real time visibility into the landed cost of inventory you have on hand which can help with pricing considerations or rebating. Real time visibility can also help signal the need to produce or shift more safety stock inventory to eliminate gaps in available inventory.
Key Components You May Have Missed
There are a few key components of a good inventory management/forecasting strategy. Ideally, you need to have real time inventory visibility. Waiting on information or delayed reporting can lead to stalls in production decisions which can hamstring the rest of the supply chain. There should also be safety stock points that trigger the need to replenish. These can be adjusted for seasonality but should be based on the timing it takes to source, make, and stock new product. Higher priority should be given to your “fast moving” products in this process. Inventory management should not just be “how much” you have but also “where” that product is. Whether for inventory exchange, speed to market or exceptions management, knowing where your product is physically situated is crucial in understanding how prepared you are to react.
Managing this visibility from “factory to front door” will provide greater confidence in all aspects of your supply chain and allow you to focus more on using that information to make informed decisions. Without easy access to inventory visibility, forecasting your inventory and production needs becomes nearly impossible. It is becoming increasingly imperative to have a partner with this level of automation that allows you unfettered access to your inventory information. Solving the inventory problem with a viable partner, frees you up to focus on other aspects of your business to drive growth.