What is inventory planning?
Inventory planning is the process that determines the timing and quantity of inventory in an organization, if done correctly the planning will align the company’s goals with production and sales. Inventory planning is necessary for any and all commerce industries, especially eCommerce. WIthout inventory planning, every inventory decision is just a risky guess.
It is necessary to plan and manage inventory dynamics in the supply chain. Inventory planning touches on supply, distribution, manufacturing, production, scheduling, forecasting, coordination, and network design. Inventory planning is so important because it is directly related to the cash flow and profit margins.
If inventory planning is done incorrectly or not at all this could cause preventable large financial loss and inventory build-up. Ideally, you want a quick turnover of products with an established profit on the market. Inventory planning can work in many different ways, there is not one specific solution because it should coordinate with your individual business.
The need for an inventory planning tool
The first step in improving your business through inventory planning is developing the plan. The inventory plan should be a clear outline regarding future products and strategies. If you are just starting out and are a little lost, invest in an inventory planning tool.
There are many different inventory planning tools and a large part of that is product research. Algopix will help with inventory management and staying on top of your supply chain. Inventory planning starts from raw materials and manufacturers, letting them know the quantity, quality, and market you’ll sell on.
A robust inventory plan will clearly outline a business forecast to meet market demand.
Benefits of inventory planning
There are many benefits to inventory planning, but the most obvious benefit is the increased cash flow. Managing your inventory will increase efficiency, eliminate bad investments, and reduce issues of inventory shrinkage.
Small businesses do not have the luxury of making inventory mistakes and they do not have an unlimited inventory budget, so it is important for them to invest in products based on practicality and profitability. The inventory planning system will increase productivity, sales, and profits while decreasing the cost of production. Inventory management maximizes operational efficiency through properly coordinating production, sales, and trade techniques. Click here to read on inventory management strategies.
Another benefit of inventory planning is holding employees accountable. It will be clearly outlined the amount of each item when shipments are made, orders are delivered, the pricing, etc. so this should lead to fewer mistakes.
In addition to decreasing human error, inventory planning will make it harder for theft and other corrupt activities to take place. The increase in accountability will be seen on all levels of the company. The profit generated because of inventory management can provide the finances to potentially expand your business and give employees a chance at upward mobility will increase day to day performance.
A third benefit of inventory planning is certainty and speed. Inventory planning provides the assurance needed to make business decisions. Planning and managing inventory dynamics in the supply chain should include supply, distribution, forecasting, coordination, and network design.
With that many factors to coordinate, inventory planning is necessary to prevent buying too much or too little or buying the wrong product, it’s not worth the risk of losing money or products. Inventory planning speeds up the process of completing a sale allowing for a quicker inventory turn around. The quantity and quality of products will be precise and accurate.
Use Algopix to select the perfect products by knowing important metrics, like profit margins, market recommendations, demand and competition levels, and competitive analysis.
Inventory planning is the key to running your business smoothly. If you want to get more done in less time while wasting the least amount of money this is something worth looking into.
Algopix helps select the right products for your specific business. Inventory planning will increase profits, employee performance, and corporate speed and efficiency. Make a plan, get an inventory planning tool, and you will be thoroughly impressed by the results.
Let us know in the comments below if you have more questions, concerns or additional tips about managing inventory. We’d love to hear from you.
The Algopix Team