Inventory planning is an essential part of business operations. Retailers, no matter how big or small, are always needed for products that are ready to be supplied because of customer demand.
Moreover, manufacturers need to have components and materials to keep the production line running. Companies that are service-based need to have tools for their trade available at all times.
For instance, if your business deals in clothing or food, you need to have good and thorough inventory planning to be successful. That said, this ongoing pandemic has made things a little complicated.
Customer behavior is no longer predictable, and in all honesty, supply chain disruption has been unmanageable. Why? Because there is a shortage of every other thing in the market, this affects a business in many ways.
However, despite it all, it is very important for businesses to continuously adjust and accommodate the changes around them to thrive. Another pandemic? Global recession? These days, anything is possible, which only makes inventory planning much more crucial.
What is Inventory Planning?
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because not everyone knows about inventory planning.
So, to make things easier, we have decided to give you a quick run-through of what inventory planning hopes to achieve:
- To have all components, materials, and/or products ready so that deliveries are made on time.
- To reduce overall production costs, this includes storage costs as well.
- Avoid having too much capital stuck in inventory.
- Avoid having to be stuck with items you can’t use or sell.
- Allows optimization of operations.
- Avoid damage, theft, and loss.
The Impact of Pandemic on Inventory Planning
First and foremost, let’s be thankful that the lockdown days are finally over. That said, covid is still affecting a good number of businesses.
One too many businesses are now improving their inventory planning according to the pandemic. Here are a couple of ways companies have changed their inventory planning.
Reduction is Just-in-time Supply Chain
The most significant impact covid has on inventory management is the preference for Just-in-case planning over Just-in-time planning. Companies have started to stick to their inventory, especially of key components and materials.
Although this is very much understandable because of who ROIs have been impacted due to supply disruption, businesses must carry on optimizing their inventory to reduce the draining of their working capital.
Staying Up to Date on the Data
Where companies used to only look at their inventory days every once a month, they are now digging this every week. The short-term focus will help your businesses identify inventory excesses or shortages, and act accordingly.
Therefore, the global pandemic has pushed businesses to stay up to date with their inventory.
Becoming More Aware
When businesses secure additional suppliers before time, suppliers will prioritize them over their other clients, if your business was to face any form of inventory shortage. This allows businesses to be more aware of how their inventory management is going and which suppliers can they trust in a time of need.
Automation
Let’s face it. This ongoing pandemic has left behind a huge wage growth and labor shortage. This only makes automation the perfect solution for almost all business owners. For instance, an automated warehouse management software will help keep track of your inventory and automatically reorder items that have low stock.
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Supply Chain Auditing
Companies are now starting to examine their suppliers more consciously. In fact, they also examine their suppliers’ suppliers. This allows them to identify weaknesses, which further enable them to predict future supply disruption.
It is essential that businesses improve their transparency when it comes to supply chain, so that they can identify supply risk. More than just that, they should also improve relationships with their suppliers by sharing supply and demand forecasts.
Once companies start to work alongside their suppliers, they can better optimize inventory planning.
Final Thoughts
Inventory planning has surely changed since the start of the pandemic, but that doesn’t mean that companies should back down. Instead, companies should learn how to adapt to such changes, because change is constant.
Businesses have to keep track of how much material and components are being used, and how many products have been sold. This is only possible through inventory management. It is also essential that companies know where everything is when needed, whether it is in the factory, in the warehouse, on a ship, or even in a store.
Thai helps in predicting deals, managing recorders, and solving shortages. We hope you now know how inventory planning has changed, and why it is important in the first place.
