Improve your Inventory Management as Brexit Approaches
- How to improve inventory management - ready for Brexit
- How can I manage my supply chain better to deal with Brexit?
- 1 Reduce inventory levels after Brexit stockpiling
- 2 Forecast for Brexit uncertainty and volatile demand
- 3 Manage supply chain delays due to Brexit
- Better post-Brexit supply chain planning is critical
How to improve inventory management – ready for Brexit
Right now, UK businesses are dealing with unprecedented times. The economic and political landscape is more uncertain than ever as we move into 2020. It looks like we’re set to leave the European Union (EU) at the end of January. But will this be via the current deal on the table, or is a default no-deal Brexit still a reality? And what happens then? Will it be business as usual, or could organisations face months of chaos and disruption?
Right now, no one knows for sure what the impact of Brexit will be. The only certainty is the amount of uncertainty that businesses face on a daily basis.
When it comes to supply chain management, Brexit still threatens to have a significant effect on your operations. So, in every scenario, it’s critical that you optimise your inventory management Brexit processes, so you’re prepared for what lies ahead.
In a recent LinkedIn article our Marketing Manager, Tracey Baker, wrote about the importance of digital transformation in helping businesses survive periods of economic downturn. It discusses how investment in technology can support businesses through times of uncertainty in three ways:
- It helps cut costs and improve productivity.
- It can provide the transparency and analytics businesses need to identify areas of improvement and opportunity.
- It helps make businesses more agile and better able to adapt to the uncertainty and rapid change that comes with a slowdown and subsequent period of growth.
With this in mind, this post is going to look at three ways EazyStock can support businesses with managing their inventory planning for Brexit, going into 2020 and beyond – regardless of our trading relationships with the EU and the rest of the world.
How can I manage my supply chain better to deal with Brexit?
1. Reduce inventory levels after Brexit stockpiling
Right now, there are many businesses that have unusually high amounts of working capital tied up in stock, to help alleviate any logistical delays that may arise, when we leave the EU. This will no doubt be affecting cashflow and liquidity. Brexit stockpiling can also result in excess and obsolete stock if the levels are not eventually brought back in line with demand.
As the name suggests, the core purpose of an inventory optimisation tool, such as EazyStock, is to optimise inventory levels and recommend the right stock to carry. A starting point for this is the system’s ability to analyse current stock levels of each SKU you hold, in terms of whether it is:
Healthy – your stock levels are suitable for your forecasted demand
Excess – you hold more stock than forecasted demand will use up
Obsolete – your stock has had no demand for a certain period of time.
Utilising EazyStock, you’ll have a complete overview of the ‘health’ of your inventory, providing all the data you need to make the right Brexit inventory management decisions. Obviously during times of stockpiling you’ll have abnormal levels of excess, even obsolete stock, but once you’re ready to start reducing them, you’ll want to see items move from red and yellow to green.
It’s fair to say that the process of reducing your stock could lead to a lot more work, particularly if you’re using spreadsheets to manually calculate your ideal stock levels, forecasts and replenishment orders. For starters, you’ll need to re-programme your ERP with updated reorder points and quantities, then, as stock begins to decrease, you’ll need to continually adjust these parameters so you can reach a new ‘norm’.
Fortunately, as part of its core functionality, EazyStock can automate the manual work for you. By using a daily feed of your current stock levels and creating future demand forecasts, the system will automatically update your ordering calculations to recommend optimised order requirements. This data is then fed back into your ERP, so it’s dynamically adjusting stock levels and only ordering what you need to fulfil demand.
No-one knows how the UK economy will perform in 2020 and it’s going to be difficult to forecast demand in markets that are continually reacting to unprecedented political and economic uncertainty. For example, 2020 could see the UK enter a recession, or the UK Government invest heavily in certain sectors to boost the economy. Both scenarios will affect demand for your products in some way, and if you’re not tracking their sales, you could miss growth opportunities or risk investing in the wrong inventory.
Carrying out monthly or even quarterly forecasts may not be enough to ensure accuracy. Instead, EazyStock tracks every SKU as they move through their own product life cycle. At each stage, the item is assigned one of nine demand types and the most relevant algorithms are used to provide the most accurate forecast. For further accuracy, EazyStock then recognises items with seasonal demand patterns and quickly identifies demand trends, adjusting forecasting to ensure you have optimum stock to serve your customers.
Because EazyStock is re-assessing your forecasts on a daily basis, your supply chain will be able to react faster to changes in demand to prevent stock-outs and optimise sales.
3. Manage supply chain delays due to Brexit
Many businesses are concerned about supply uncertainty when we leave the EU. And whilst EazyStock cannot wave a magic wand to prevent post-Brexit supply disruptions, it does have a number of tools to help you manage any issues. For example, the system will:
- Actively track real supplier lead times, with real PO data, and automatically adjust inventory levels to compensate for delays.
- Dynamically adjust safety stock levels if supplier lead times increase, to help prevent stockouts.
- Identify products at risk of run out and recommend order quantities to help prevent this happening.
- Ensure you’re ordering the right products e.g those most affected by lead time delays and those most in demand.
- Allow you to place orders more efficiently so you can react to supply issues quicker.
Better post-Brexit supply chain planning is critical
As Brexit looms, many purchasing teams will need a tighter grip on their supply chain and inventory management processes. To navigate through these turbulent times, having accurate and insightful data will be critical to help make informed decisions. In addition, businesses that can respond quickly to changes in supply and demand will also be in the best position to prevent stock-outs and keep customers happy.
If you’d like to know more about how EazyStock can enhance the inventory management capabilities of your ERP system, call us on 0121 312 2992 or request a demo.