Inventory planning is the process of determining the optimal quantity and timing of inventoryfor the purpose of aligning it with sales and production capacity. Inventory planning affects a company’s cash flow and profits while contributing to an efficient supply chain. According to NetSuite, ultimately “Inventory planning helps lower the costs of keeping items in stock and helps make sure there is enough stock for making and selling items.”.
What are some ways to improve your inventory planning?
There are three main strategies to improve inventory planning: Preventing stockouts, minimizing overstocking and improving processing.
What are some best practices for effective inventory planning?
A company’s best strategy for improving and maintaining an effective inventory planning method depends on where improvement is needed most. Companies should assess their inventory management process to determine weaknesses (ex. maintaining too much stock in warehouses). Some common methods to improve inventory planning are:
- Utilizing a demand forecasting formula
- Performing regular stock counts
- Implementing software to automate manual processes
- Proper training and accountability
