Inventory planning for success.

Accurate inventory planning has become even more important due to the pandemic and current supply chain issues but requires careful analysis to optimize stock levels and manage cash flow, according to Jill Liliedahl, vice president of business development and marketing at Inventory Planner.

The key to this is improving demand planning, which means looking at the right time period for forecasting. “What is the best period of time in the past to use for data to help indicate how much stock to have in the future?” she said.

She said sellers should look at three time periods depending on the product they are considering. These include seasonal products (last 12 months), non-seasonal (last six months to a year) or trendy items (last 14 to 30 days).

But she also warned not to get caught up in the peculiarities of 2020’s numbers when forecasting. “Think about what’s most relevant to what will happen in the future,” she said. That means when predicting future growth, understanding that a cap might be required on forecasted increases to avoid overstocking.

For seasonal items she also urged sellers to move fast, speaking to vendors urgently to help mitigate supply chain issues, as well as to help them with their own forecasting by providing estimates of what ordering patterns might look like. “That helps them to plan and also helps to secure your relationship with your vendor,” she said.

Liliedahl also explained how to improve forecasting, avoiding stockouts, prioritizing what to order and analysing replenishment profit, as well as keeping an eye on stockturn. “You need to keep stock moving and we have a natural inclination to get stockturn as low as possible, but you can run stockturn too low so need to keep a sweet spot,” she warned.

She also urged sellers to think about each sales channel as having its own personality. “Think about the different personalities of different locations or sales channels and that will help you fine-tune your inventory planning,” she said.