5 Ways Retailers Take Control of Demand Planning and Inventory Replenishment
Keeping stock levels at the optimum level is challenging for retailers – too much and you have cash tied up in inventory, too little, and you lose customers because you can’t deliver the product when they are ready to buy. Seasonal fluctuations in demand, theft, and spoilage are factors that contribute to this problem.
Here are ways retailers – online and in-store – are handling the problem of keeping inventories low but still meeting demand, even when demand fluctuates.
1. Ensure access to real-time inventory data
Many buyers enter your store having researched the item they intend to purchase. Others want to see and hold the physical product before going home and buying it online. In either case, they will want to know if the item they selected is in stock. Showing product availability for both online and brick-and-mortar stores requires an integrated system that shows product inventory values in real time. Access to real-time inventory data helps retailers prevent out-of-stock situations, which can lead to lost sales and increased customer churn.
2. Leverage automated tools for accurate demand forecasting
It’s not enough to know how much inventory your company is carrying today; you also need to be able to prevent stock-outs in the future. Modern ERPs provide automated tools that use previous sales data and customer buying trends to forecast how much new inventory you need to purchase accurately, when those orders should be sent, and the best way to allocate them among your warehouse locations.
3. Track changes in customer demand
Simply ordering a large inventory of last year’s popular products is not enough: a popular item this year might have little to no demand next year due to factors such as a newer product with more features, changes in style preferences, and a lack of need for the product. Retailers must follow trends to anticipate when the demand for a product fades. In November 2023, the Wall Street Journal cited an example of a company overstocked with items that “were popular during the pandemic but fell out of fashion as consumers returned to offices and restaurants.” Advanced business analysis tools available in modern ERPs can use the sales data you currently have on your customers to model the ebb and flow of demand for your products and help you determine the optimum replenishment levels for your inventory.
4. Measure the impact of your promotions
Customer incentives, coupons, discount offers, and frequent buyer perks help increase sales. However, retailers must track the impact of these special promotions to measure their effectiveness. Knowing the most profitable promotional activities will help retailers drive future sales initiatives.
5. Identify external influences on sales
Retailers should also be aware that external factors can influence high sales volumes. The pandemic is one example, but there are others. If not properly considered, one-time or seasonal events such as sports tournaments, festivals, conventions, and exhibitions can seriously skew your historical sales data. Modern ERP and CRM systems can help retailers track and analyze internal and external sales data to find anomalies in their historical sales data and anticipate sales spikes in the future.
Take control of your inventory with a modern retail ERP solution
LS Retail offers comprehensive ERP functions for financials and integrated warehouse, and POS features to give you real-time inventory management and access to advanced sales data analysis using Power BI and the AI capabilities of Copilot.
Contact ArcherPoint to see how LS Retail can help you take control of your demand planning and inventory replenishment.