Three Fundamental Truths About Inventory Planning
Inventory experts share what they’ve learned over decades of working on the problems of optimal replenishment. After working with thousands of companies over decades, the team behind Sage Inventory Advisor has learned these three fundamental truths about inventory planning which we share in this article.
- Balance is the Goal
First, all inventory-based companies – distributors, manufacturers, and retailers – are challenged by the competing goals of having just enough stock on hand to meet demand, while avoiding warehouses full of excess product. Achieving a optimal inventory balance is critical.
- Time is Being Wasted
Second, the buyers and inventory planners who are stuck in the middle of those competing goals inevitably spend too much time, effort, and stress managing the mountains of data required to truly optimize their inventory levels. Putting out fires all the time is simply not an efficient use of time.
- Outdated Tools Hurt Profits
Third, most small and medium businesses are using outdated tools and processes – and profits are suffering as a result. These are tools like spreadsheets, custom reports, and worse. It is alarming how commonly these ill-fitting solutions are being used for inventory management and replenishment.
Ignoring These Truths Comes with a Cost
Profit is negatively impacted by the hidden costs of excess inventory for some items. That excess means working capital is unnecessarily tied up in the warehouse, when it could be used for other profit-driving activities in the business. And that excess stock also incurs very real carrying costs, which can be substantial.
More obvious is the impact of not being able to fulfill customer demand on a timely basis. Maybe that means the sale is only delayed, but there are many other times when the sale will be lost for good. And if this happens often enough, it can mean a lost customer.
What’s the Solution?
Businesses that manage inventory are more than familiar with this challenge, and many of them try to get by with an inventory spreadsheet. That’s a task it is simply not cut out for, and the result is hurting the bottom line. What’s required is a true Inventory Management System – a user-friendly app like Sage Inventory Advisor (SIA).
SIA is a game changer for mid-sized companies that manage inventory. It is extremely cost effective, easy to deploy, easy to use, and specifically designed to help solve the problems of excess inventory and stock-outs once and for all.
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