Economic Order Quantity (EOQ)Įconomic order quantity (EOQ) is a method used to calculate the optimal inventory quantity that you should order. There are a handful of inventory planning methods to consider and the right one depends on your products, inventory management system, and business processes.
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Now that we’ve discussed the benefits and fundamentals of inventory planning, let’s talk about how to actually implement it. How to do it: 5 inventory planning methods to consider Once the season is over, a good inventory planner will coordinate with other stakeholders (e.g., buyers, managers, etc.) to discuss the outcomes and results of the season and what the team should do to improve.Īt this stage, it’s important to organize the data collected over the course of the shopping season and make sure the info is accessible for future planning. Again, it’s important to make these decisions early so you don’t end up with stale merchandise. Planning sales and markdowns, for items that aren’t selling or moving quickly. If possible, ride these waves by carrying relevant products. Paying attention to developing trends or events, including the weather, pop culture interests, news, and more. Try to evaluate early on what’s selling well so you can place orders early and capitalize on the increased demand. Looking at top-performing items, and re-ordering extra stock if necessary. Retailers should monitor stock levels and performance during the season, and then iterate accordingly. Inventory planning doesn’t stop at the pre-season stage. Market trends data, which can be obtained by purchasing reports or by using tools like Google Keyword Planner and Google Trends, which analyze search volumes and trends. Take note of any input, requests, or concerns raised by your frequent shoppers and ask your sales associates about any notable feedback they’ve received about your products. Qualitative feedback from associates and customers. Historical sales and inventory data, ideally from your POS or inventory management software. Some of the resources that would be helpful at this stage are: You also need to consider existing and future trends, along with the current state of the market to figure what items to carry for the upcoming season. You plan ahead by analyzing sales data from comparable seasons and factoring in that information in your purchasing decisions. This is where most of the demand forecasting takes place. Inventory planning can mean different things, depending on the period of the year or season. Rather, it’s a process that you implement continuously as the shopping season progresses. Inventory planning shouldn’t be a one-and-done activity.
It helps you optimize levels and keep quantities just right. Inventory planning helps retailers avoid stocking too much or too little inventory. When people know they can reliably get the products they need and want from your business, they’re more likely to return. Having the right products at the right time keeps your customers happy. It also frees up your warehouse or storage location, ensuring that you have enough space for revenue-generating merchandise.
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You can keep stock moving, and free up cash flow to reinvest in your business. Proper planning can prevent issues like having too much capital tied up in your inventory. You’ll be able to stock up on the products that resonate with your market, ultimately driving sales and revenue. The importance of inventory planningĭone right, inventory planning enables you to run a thriving retail business. The practice involves demand forecasting and budgeting, in which retailers factor in sales data and trends to determine the optimal inventory levels and the right timing for sales, promotions, and markdowns. Inventory planning is a process for deciding what retail products to stock and how much to order. And this article will give you a quick guide on what it is and how to implement it.
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