Mark Chapman 25 September 2019 4 min read What's in this article? Do you need inventory planning software?Know your inventory planning limits! Do you need inventory planning software? Enterprise Resource Planning (ERP) platforms offer a wealth of benefits, including streamlined processes, improved productivity, centralised data and better departmental collaboration. However, many ERPs lack functionality when it comes to carrying out more sophisticated tasks such as demand forecasting, stock classification and automating replenishment. Stock planners often experience tell-tale signs that they need more advanced inventory planning software to support their ERP’s capabilities. Are you one of these people? Here are eight warning signs to help you decide if you need inventory planning software… 1: Your demand forecasting is too simplistic Effective inventory planning and control begins with effective demand forecasting techniques. If your actual demand is often way above or below your predictions then the spreadsheets or ERP you’re using could simply be inadequate. It’s very probable that you either use a basic moving average formula to calculate demand (historical average demand over x months/ x months) or simple mathematical forecasting techniques. Either way, both methods will fall down unless they take into account the product life cycle stage of every item in your portfolio. This is because the demand pattern of items in their growth phase of the product life cycle will be different to those at maturity or in decline. During ‘growth’, items see an increase in demand, at ‘maturity’ demand usually remains steady, becoming more erratic as it reaches ‘decline’, as sales become less consistent. The ‘demand type’ of a product determines the best statistical algorithms to use for forecasting e.g some algorithms are better for erratic demand types, whilst others give more accurate results for more stable demand. Basic forecasting calculations cannot take this into account. 2: You’re unable to forecast seasonality or deal with volatile demand fluctuations If you struggle to produce accurate forecasts for seasonal products or SKUs where demand radically fluctuates up and down, stock planning software could be very helpful! Every business wants to capitalise on busy sales periods and running out of key inventory items before the end of the season can dent profits. At the same time, being left with excess stock until the following season can tie up important capital. Advanced inventory planning systems can make forecast adjustments for demand variables, such as seasonality, trends and promotions, on top of your base demand. 3: Your stock levels are growing, inventory turnover is slipping If stock in your warehouse is beginning to pile up, alarm bells should be ringing about your current inventory planning software. You should be able to segment your stock into three types: healthy stock, excess stock and obsolete stock. Obviously you want more of the first and less of the latter two. If you’re over ordering items that aren’t selling, excess stock will soon mount up and you’ll experience low inventory turnover rates. Capital tied up in stock can also be bad for your overall business, affecting carrying costs, liquidity and cash flow. 4: Your customer service levels are highly variable How do you measure your warehouse’s ability to fulfil customer orders? No matter whether you use a fill rate, service level, service index or perfect order percentage KPI, if they’re not consistently high then it’s time to investigate why. Often an inability to fulfil orders is due to stockouts which can link back to poor forecasting or inadequate inventory replenishment processes. 5. There’s a growing trend of lost sales or accounts Stock availability issues can often lead to a drop in sales. You may be tracking the obvious consequences of stockouts, such as abandoned online baskets or a decline in sales numbers, but, at the same time, don’t forget to monitor longer-term signs. For example, if you continually fail to fulfil customer demand, you could see customers moving to competitors for good, or find you lose important customer accounts due to an ability to realise orders on time. Sophisticated stock planning software can help get rid of the root cause of these issues. 6. You’re constantly fire-fighting When you and your inventory planners are constantly fire-fighting, it can be tough to achieve your targets, or have time for strategic planning. Dealing with back orders and expediting replenishment orders is inefficient and costly for any business. A smarter approach is to address the cause of problem – poor inventory planning systems. 7. Inventory planning and replenishment is time-consuming If you’re using manual processes to reorder stock this is a certain indication that it’s time to consider upgrading to better inventory planning software. Processing and checking every purchase order manually is time-consuming. Plus it’s almost impossible to reduce your order cycle times (the time between placing each order), which means you’ll be ordering less frequently and have more money tied-up in stock. 8. You’re unable to manage varying supplier lead times Do you struggle to account for your individual supplier’s lead times and reorder parameters when placing orders? For example, do you often get caught out by annual shutdowns, busy periods or holidays such as Chinese New Year? Or do you find it hard to keep track of min/max order quantities and contracted reorder frequencies? If these challenges increase your risk of stockouts and lead to inefficient replenishment practices – it’s time to talk about inventory planning software! Know your inventory planning limits! Many businesses use ERPs or spreadsheets for their inventory planning, but most will agree they have limitations. Most ERP systems are ideal for tracking inventory and monitoring stock levels. But when it comes to inventory optimisation functionality, such as advanced demand forecasting, stock optimisation and automated replenishment – they lack the capabilities. These inventory planning processes therefore end up being executed in spreadsheets, which is time-consuming, can lead to human error and can become unmanageable as product portfolios expand. If you or your inventory management team are experiencing the above challenges it may be time to consider inventory planning software, such as EazyStock. EazyStock is easy to implement – the advanced inventory planning software simply plugs-into your ERP. It then removes the need for manual spreadsheets, allowing you to automate and speed up forecasting, stock management and purchasing activities. Armed with better stock planning tools, you and your team will have more time to think strategically and focus on improving your efficiency and profitability. If you’d like to know more, call us on 0121 312 2992 or contact us here. Share Mark Chapman 25 September 2019 4 min read Sign up for the EazyStock Newsletter Stay on Top of the Latest News, Trends, Tips, and Best Practices for Supply Chain Management, Inventory Optimisation, Replenishment & Purchasing, and Demand Forecasting with Our EazyStock Newsletter.