Inventory planning involves using forecasting techniques to estimate the inventory required to meet consumer demand.[1] [2] [3] The process uses data from customer demand patterns, market trends, supply patterns, and historical sales to generate a demand plan that predicts product needs over a specified period.
Using the demand plan, supply chain professionals collaborate with suppliers to ensure timely deliveries, manage warehouse stock levels, and set production schedules.
Proper inventory planning provides several advantages.[2] It helps manage cash flow, which is crucial for businesses, especially those with limited capital.[2] Managing inventory costs and sourcing efficient inventory contributes to financial stability.[2] Aligning inventory with market demand improves operational efficiency, as does consistent inventory turnover.[2] However, managing obsolete stock is vital to avoid potential financial issues.[2]
Structured inventory planning can also mitigate the risks of inventory misuse by employees.[2] In situations lacking adequate oversight, potential risks such as theft or unauthorized use can negatively affect financial results.[2]
The use of software can further enhance inventory planning.[3] Some notable software includes Inventory Planner by Sage,[4] SAP IBP,[5] Syrup Tech,[6] and Toolio.[7] Such software also automates various inventory tasks, promoting precise and efficient planning with reduced manual intervention.[2]