Did you know that as many as 60% of inventory records are inaccurate, and that sales can grow by up to 6% when corrected? Don’t let outdated statistics hinder your business.
When running an e-commerce store, there are few things more important than managing your inventory well. Still, many businesses choose to manually complete inventory procedures or use outdated planning software. Newer, more robust inventory software can track more than just inventory and give your business a competitive advantage. Read on to learn about why you need an inventory planner, and how it can help you with inventory management, sales forecasting, trend analysis, and more.
What Is Inventory Planning?
As much as 80% of a business’s cash is tied up in inventory. In e-commerce, inventory is your largest asset. Without brick-and-mortar stores and face-to-face communication, most online retailers rely heavily on their products to do the talking. As a result, it’s essential you manage and control this inventory well. But it can be a delicate balancing act: Hold too much, and you’re left with unusable dead stock. Hold too little, and you risk missing out on sales.
Ensuring you have the ideal amount of inventory on hand is called inventory planning. Inventory planning covers all parts of your supply chain, from ordering to warehouse operations and packing. When done well, inventory planning can help your business maximize sales and reduce costs.
In that sense, inventory planning seems pretty magical. By ensuring you have the perfect amount of stock in your facilities at various times, you can reduce costs and optimize your supply chain. But, of course, it’s not as simple to perform as it sounds. Managing inventory requires looking at several factors, including expected business growth, upcoming trends, production costs, different suppliers, new products, and so much more.
What Is an Inventory Planning System?
As the e-commerce sphere becomes increasingly crowded, there’s been a push for absolute efficiency in all areas of business. As a result, being able to allocate inventory well while minimizing waste has become a top priority for many companies. Managing inventory, however, involves hundreds of moving parts—and often spreadsheets don’t cut it.
Inventory planning systems, also called management systems, have become an increasingly popular solution to this challenge. Today’s inventory planning systems encompass every part of a business’s operations, from analyzing historical data to making current purchases and even forecasting.
In addition, a key part of inventory management systems that many people overlook is their ability to explain consumer buying behavior. With insight into product performance, sales channels, and marketing campaigns all in one place, inventory management systems make it easy to connect the dots and understand your business’s position as a whole. These insights help inventory-planning system users make educated decisions, allowing them to increase productivity and profitability.
Signs You Need an Inventory Planning Solution
If you’re on the fence as to whether to build and use an inventory planning solution, answer the following statements. If you answer yes to three or more, it’s time to consider using an inventory planning solution such as Shypyard.
- I struggle to meet business demand.
- I have several points of sale I need to track.
- I struggle to find specific inventory figures and values I need.
- I feel my inventory and holding costs are very high.
- I struggle to use the data I collect in effective ways to propel my business forward.
- Several areas of my business require very different inventory data.
1. You struggle to meet business demand
If you frequently experience stockouts and are scrambling to give customers what they want, you almost certainly need to upgrade your inventory system. Struggling to meet demand is one of the key reasons for adopting an inventory management system, because one of the worst things you can do as a business is be unable to capitalize on customer demand. You’ve done all the hard work getting clients to your website and interested in your product, but you can’t reap the rewards! This can discourage them from returning to your store and will lower your conversation rates.
The easiest way to avoid this misstep is through careful, long-term planning. Inventory shipments can take months to arrive, so preparing in advance is the only way to ensure you’ll be ready for whatever challenges come your way. Advanced software such as Shypyard’s automated inventory planning service can help you forecast sales for months in advance and keep track of how quickly certain SKUs are selling.
2. You have several points of sale (POS)
Whether you sell on two platforms or twenty, the overlapping data can be a nightmare to keep track of. Products selling on Amazon, for example, don’t translate to Shopify inventory levels, meaning you need to ensure your inventory counts correlate with inventory on hand. This manual balancing is time-consuming and can sometimes be erroneous. The right data software can automatically reconcile sales differences and ensure all sales figures match.
In addition, switching to an inventory software can help your staff stay up to date and aware of business changes, even if two people work in different sectors.
3. It’s hard to get the information you need
As you’ve surely heard, data is king. Making smart business decisions relies on having accurate data to back up your choices. As a result, managing inventory across several locations—or even in the same large facility—can be extremely difficult.
If you find that you or your team members struggle to find the data they need to complete tasks, it’s a sure sign that you need an inventory management system. Without access to data, it may be hard to understand your stock availability and customer demands, and it will be more difficult to control costs. In addition, you may have trouble processing returns, which is an important part of keeping customers happy. Without understanding how much stock you have available and when shipments will arrive, you may leave customers feeling discouraged and taken advantage of.
Your data processing system should allow you and your team to view real-time figures, any time. This key point will allow you to ensure that your business is running smoothly and efficiently.
Having a trustworthy inventory management system can also reduce the time spent manually searching for data and help all team members be on the same page. In addition, many systems—including Shypyard—allow users to track custom KPIs and see sales figures that matter.
4. You have high inventory holding costs
Holding costs include all costs associated with storing inventory and the inventory that remains unsold. They can include the prices of damaged and spoiled goods, the space units take up in a warehouse location, and insurance costs.
More is not always better; holding too much excess inventory can add up! Having high holding costs indicates you are tying up cash in inventory when it could potentially be allocated to better places in your business.
An inventory planning solution can help you find out the optimal level of inventory to carry for various SKUs. While formulas can get the job done, most manual calculations fail to take into account specific details about your business, such as size, scale, and company direction. Shypyard’s inventory planner uses machine learning to always provide your business with smart, relevant insights.
5. You don’t know how to use your data
Data is key to your business’s growth, but how should you be using it? Analyzing, interpreting, and acting on data is vital to making the best decisions for your business.
Through an inventory planning solution’s intelligent analytics, you can collect the data you need with the depth you require. That way, it’s easy to understand the best way to move forward. Some key questions inventory planners can help you answer include:
- Which product is selling the best?
- How does product X compare to product Y?
- During which days/weeks in this time period did we sell the most units of a product?
- How many customers came from referrals?
- How many customers used gift cards or discount codes with their purchase?
6. You have many disparate departments, each with different data needs
Your business may have several employees and departments that all require different kinds of data. Does your marketing team want to see the SKUs that are selling the best, or leads and campaign lengths? Does your IT branch want specific sales and analytical data?
Using manual forms of data collection can make the process of gathering these figures time-consuming and slow. With a tool like Shypyard’s inventory planner, however, you can track several custom KPIs through different data flows and filter all data through easily managed dashboards.
Creating an Inventory Planning Solution
From the six situations explored above, it’s clear that complete visibility is key in running an e-commerce business—and that clarity begins with your inventory. Now that you’ve established why you need an inventory planning system, here are three features to look for in the system you choose:
Forecasting. A key element of inventory management systems is their ability to perform predictive analysis and sales forecasting. Good planners should be able to retain historical data, understand promotions, and make smart, relevant predictions.
Customizability. One of the most important reasons to use an inventory planner is its ability to track data that’s relevant to you and your business. What good is a service if you can’t get what you need out of it? Shypyard offers the ability for users to track custom KPIs, plus an editable dashboard so you can view key metrics at a glance.
Reporting. Your planning system should be able to deliver all data in a digestible way. Whatever the format, you should be able to easily identify the information you need. In addition, your planner should allow for easy comparison with historical data as well as data across different platforms.
Set your business up for success with an inventory planning solution
As a refresher, if you can answer yes to three or more of these statements, it’s time to consider adopting inventory planning software.
- I struggle to meet business demand.
- I have several points of sale I need to track.
- I struggle to find specific inventory figures and values I need.
- I feel my inventory and holding costs are very high.
- I struggle to use the data I collect in effective ways to propel my business forward.
- Several areas of my business require very different inventory data.
