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A Day in the Life of an Inventory Planner
The warehouse might seem like a boring place, but it’s actually a dynamic environment. Your supply chain is an ever-changing habitat. From unexpected weather disturbances and holidays across the globe to new developments in your industry, there’s always something going on that affects the supply chain. And that means there will be regular changes to the conditions in your warehouse, and those changes affect your inventory levels.
Keeping track of your inventory is hard enough. Knowing how to read the tea leaves to keep your inventory items at optimal levels is nearly impossible if there are any complexities you have to factor in — and there are always complexities in the modern supply chain. When the conditions change in your warehouse, your inventory planner needs to be aware of the developments as they’re happening.
Poor management of this dynamic environment leads to the costly accumulation of excess stock and painful stock-outs — which can result in lost sales and lost customers. Although those problems may seem opposite (too much vs. not enough), they can occur simultaneously on different items in your warehouse, which further exacerbates the problem. Sales go down, profit on sales you do make goes down, and too much of the company’s working capital gets tied up in items that are collecting dust.
How can an inventory planner manage all of the challenges? How should a purchaser compensate to ensure the warehouse is as healthy an environment for profitability as is possible?
Let’s look at a day in the life of an inventory planner.
The Daily Grind
You’re walking into the warehouse, and the day’s already begun for your company. The business is growing, and new market opportunities are opening up all the time. Managing growth isn’t easy when there’s only so much liquidity within the business, and the planning team has to keep a close eye on how things are developing. That’s why there are several employees bustling through the warehouse first thing in the morning.
As you take your seat, you’ve already been alerted to a couple trouble spots. The sales team’s working hard to close the quarter, and sales of a relatively obscure item have surpassed your ability to fill the orders. You haven’t even poured your morning coffee and already you’re looking at a suboptimal choice: do you change the date the items get delivered, or do you wreck your profit margin by expediting a reorder so you can fill the order on time?
It turns out there are a few problems like this brewing already this morning. Better get that coffee.
Two Key Aspects to Inventory Planning
The first thing you have to do as an inventory planner is figure out what is going on in the warehouse today. If your supply chain were impossibly simple and the demand from your customers was flat, you’d be guaranteed smooth sailing nearly every day. But supply chains are increasingly global and demand fluctuates in a variety of complex ways, so there’s always something going on that needs your attention.
That leads you to the second thing you have to do as an inventory planner: figuring what orders you need to place today. Deciding you need to replenish an item is only part of the issue. Do you have minimum order requirements to account for, or perhaps a complicated lead time for replenishment? Is there stock in your other warehouses to fill your need? Do you need to factor in Bill of Materials or Product Kitting?
These are the two daily aspects of the job — what’s going on, and what should be ordered. And the tools at hand? Maybe some basic functionality in your ERP software, maybe a spreadsheet with some fancy pivot tables and rudimentary regressions. For some basic planning tasks, these tools will do the trick. However, if there are any complexities in your operation, these tools will leave you effectively blindfolded. You need better visibility, fast.
Your Gut Intuition Won’t Save You
You can use your intuition to figure out decent safety stock levels and you can rely on sales projections to inform your ordering, but these inefficient tools aren’t removing that blindfold any time soon. Good luck when a storm hits; whether that’s an actual storm that disrupts your next shipment or a change in the headwinds of your industry, you’re not likely to make optimal orders any time soon. You can get by, but at what cost?
These are complicated decisions, and gut feel doesn’t cut it. If you’ve been managing inventory for years, your experience and intuition are definitely helpful assets here, but you need better and more timely information than your intuition to make decisions. WIthout visibility and better data, your outdated inventory management process is crushing your ability to profit and fill orders properly.
Hopefully you made the right call on that immediate problem you had to address as soon as you got to work, and maybe that coffee is even starting to kick in, too. You’re a professional, and you know how to fight random fires when they arise. But what about the issues you and your staff don’t know about? What about the problems you are aware of, but keep getting pushed into the future because of more pressing tasks? Ad hoc inventory management can work, but only for a while. For most modern businesses, the ad hoc approach should be a non-starter.
Finding the Right Tools for the Job
You can’t keep using suboptimal tools for demand planning. What you need are optimal order recommendations and the tools that get you there. You need an application to deliver best practices, run algorithms, and alert you to the most important issues in your warehouse. You need to know what should be ordered today. You need to remove the blindfold.
When we made NETSTOCK, we wanted to build an inventory replenishment app that would work with your ERP data to show you what’s really going on. You need data-based forecasts, item classification, and management by exception. That’s exactly what NETSTOCK was designed to handle, using the algorithms that were far out of reach for the average distribution and manufacturing business. NETSTOCK gives you the visibility you’ve lacked, and it enables you to incorporate the industry-specific knowledge you’ve acquired over the years. NETSTOCK can’t run your warehouse for you, but you’ll quickly realize you shouldn’t have been running your warehouse without it.
Your ability to keep capital moving through your business is a matter of survival, and inventory is a very real representation of that capital. As the planner, it’s your job to maintain a warehouse where capital can flow and, ideally, grow.
It’s time to stop using stop-gap measures, intuition, and improper tools. Take a look at NETSTOCK and discover why we like to call it the inventory optimization app. There’s no other tool like it.