Grow your business with Automated Replenishment Planning
Proper planning is required to run any business successfully. You need to plan beforehand so that nothing goes wrong. If you run an eCommerce business or retail business, you might sell out of products which results in out-of-stock items. Thus, further orders cannot be fulfilled, which leads to customer dissatisfaction. Replenishment inventory planning is necessary to ensure that your inventory has optimal levels of every product and can fulfill orders at the right time.
Replenishment inventory planning is a complex process, and you need to consider many factors, including logistics routes, availability, timelines, and expenses. There is no purpose in replenishment planning if the goods and products do not arrive on time, have an incorrect quantity, and are too costly to profit. Retailers often find themselves in indecision about how to plan replenishment. Engaging a replenishment planning software can be beneficial, and companies can quickly achieve their targets.
However, there are other practices that you should follow for planning replenishment. But first, let us get to know what replenishment planning is.
What is Replenishment Inventory Planning?
Replenishment planning is the method of reordering goods and products that have sold out or have low stock in the inventory and are likely to have demand in the future. The main aim of replenishment planning is to ensure that retailers have the right quantity of products at the right time and at the correct location for enhancing sales and reducing costs. Replenishment inventory planning tells you how to replenish inventory throughout the season, what quantities are required, and how often and which vendors and shippers are the most profitable.
Benefits of Replenishment Planning
- Minimized process costs.
- Higher service levels.
- Enhanced inventory turnover with lower stock levels.
Inventory planning aims to lessen the risk of out-of-stock products, unwanted markdowns, and total expenses.
Steps Involved in Replenishment Planning
Replenishing fast-moving commodity products can be highly complicated when it comes to forecasting demand. In addition, assuring the availability of the right product, in the right quantity, in the right place at the right time can become even more grueling when it comes to manual ordering. Businesses can add ease and efficiency to their replenishment process with the help of proper replenishment planning
Have a Clear Idea of the Entire Business Scenario
Often, retail businesses are divided into different operational segments in which senior business leaders are in charge of their category only, such as replenishment, assortment, allocation, vendor relations, etc. It may end up in a communication breach as one segment plan may fail to consider the other plans, which can hamper the replenishment process.
To solve this problem, you need to fix a meeting with all the segment heads and discuss the plans and factors that impact the replenishment procedure, chalking out all the current policies and processes. After that, to have a proper solution, you need to work in unison to develop a united process considering the whole product life cycle – from the time an order is placed with a vendor to the time when it is at hand for sale to a customer.
Make a List of Product-Specific Distribution Considerations
It is essential to consider the demand for a product when conducting replenishment inventory planning. However, the product’s distribution journey should also be taken into account. You need to know whether your goods are to be replenished directly from the supplier to the store or from the supplier to the warehouse, distribution center, or cross docks.
Moreover, you need to know the demand at each of the locations. Stores at certain locations might satisfy customer orders directly, whereas a few may serve other local stores. Demand varies from store to store, and each one of them might have its own inventory planning and capacity limitations.
Understand the Product-Specific Distribution Process
Replenishment inventory planning is also referred to as sales and operational planning as stock reordering is indistinguishably connected with various factors throughout the product life cycle. Thus, when planning replenishment in a comprehensive and integrated approach, you should clearly understand each component of the distribution and every channel that the item may be sold through. Specific things to assess in distribution include packaging and shipping time, lead time, manufacturing time, customer order fulfillment, processing time at the warehouse, promotions, and allotments of new orders. These aspects and other activities in a retail organization, affective abilities, and operations should be considered part of replenishment.
Integrate AI and Developed Analytics Whenever Possible
Replenishment planning may seem unmanageable for a retailer with hundreds of items, multiple locations, and other significant aspects. Retailers mostly try to handle replenishment manually, which does not provide effective results. While doing so, products have to be looked at at the category level, and other important factors have to be overlooked. The process is filled with mistakes and is not feasible, leading to over-stocks, lost sales, and increased costs for distribution.
Automating the process through replenishment planning software is the best solution. This software has developed analytics and AI technology in-built to tackle replenishment needs efficiently. Replenishment planning software can produce a unified estimated analysis of each aspect mentioned by looking at the products at a granular level. It means replenishment can be done at the SKU level while enhancing GMROI and satisfying customers who can get the products they came to the store. Advanced technology allows you to check the reliability of the inputs you get.
Be Ready to Handle Risks
You can concentrate on the rest when your system has been optimized for estimated product behavior. There are already known risks, such as specific dates on which the factories will be closed, production won’t be possible, and replenishment planning can be scheduled likewise. However, risks such as unfortunate weather changes cannot be accounted for. Good replenishment inventory planning should involve contingency plans as well. To overcome challenges, you need to know whether a different supplier source is available, whether inventory space is available for safety stock, etc.
Replenishment planning software can help you achieve proper replenishment planning and save you from understocking. Once you understand what you want to achieve through replenishment planning, you can instruct the software to carry out automated processes with the help of AI-based technology and advanced technology.