Inventory planning software is vital for global logistics, as it helps you optimize your inventory levels, avoid stockouts or overstocks, and reduce cost sand waste. However, how can you ensure that your plans and forecasts are reliable and accurate, especially in this uncertain and dynamic market? In this blog, we will analyze some of the best practices that can improve your inventory management and forecast accuracy and why accurate data is essential for predicting the future of your business.
Why Accurate Data is Vital for Inventory Planning
Planning software can be a great asset in helping to manage availability and product demand effectively, but what happens if the data put into the system is incorrect? Or when that data leaks into other areas of operations?
Apart from preventing a planning solution from being used efficiently, inaccurate inventory data can influence other areas of operations, including store KPIs, spoilage, customer availability, and sales. For example, the record data reflects that there are 40 bread loaves in stock, but if there are 100 in the store, then 60 bread loaves are at risk of spoiling. On the other side of the issue, if the stock record shows 100 loaves, but only 40 are on the shelves, there is a chance of lost sales and a drop in overall customer satisfaction.
Data inaccuracies are not just restricted to affecting store operations. Minor discrepancies add up across a complete network of stores and can escalate into far more significant losses. This inventory inaccuracy can cause financial loss from lost sales or slow-moving products. Manually updating these numbers by hand might be a temporary solution, but it negates the benefits of having an optimized inventory management software in the first place. Evaluating where the initial data collection process went wrong is an excellent first step when looking for a solution.
Four Common Causes of Inventory Data Inaccuracy
1. Unrecorded Use of Stocks
The inner consumption of store stock, such as bakeries or in-store cafes, should also be recorded cautiously. Unrecorded inventory stocks will indicate more stock held than actual physical stock numbers. This will make it impossible for you to zero in on the missing products and make your operations more difficult to run smoothly. Inventory planning software automates this process and gives you real-time stock availability.
2. Delivery Timing
The timing of delivery and stock counts can significantly impact the data reflected in inventory levels. A brick-and-mortar store with a standard opening, closing, and delivery schedule might not have any issues. But a24-hour facility with uncertain delivery hours might miss inventory numbers in their day-to-day counts.
Trying to make a decision on this inaccurate data can cause uncertainties, so any actions regarding inventory counts must take place in a proper sequence.
3. Mismanaged Returns
Another area where inventory irregularities can happen is through mismanaged returns. You get an inaccurate return record when returned products are misplaced or coded incorrectly and returned to the stock. Effective inventory forecasting software ensures accurate reporting so you can make better decisions for future product demand.
4. Human error
Human error can escalate various data discrepancies at any point along the supply chain and significantly contribute to inaccuracy in inventory count, from errors in counting to scanning errors and mistakes in picking and placement.
One of the earliest ways to minimize human errors is to connect your business with inventory planning software so that you can assess your business operations and processing. It’s easy to access and keeps your inventory organized and properly maintained.
How to Improve Data Collection and Inventory Accuracy
These minor discrepancies in stock data can become consequential problems in inventory accuracy, so getting ahead of stock input faults is critical. A reliable inventory management tool can record when stock measurements change and assess key performance indicators to help identify as scenario where input data might be inaccurate.
Investing in automated inventory planning software can help immensely. This way, you can analyze your own inventory data to identify patterns indicating stock record errors. For instance, analyzing a report to find items with the bestselling stock record but no recent sales would help identify situations where the stock record is too high. On the other hand, reports for an item with sales more notable than a stock record would show the opposite and lead the stock to negative numbers. An inventory management system is also equipped with monitoring and triggering features for optimum visibility throughout the whole operations and inventory management.
A good inventory planning software can use available data to create views and alert users for relevant errors, making it an excellent inventory planning tool for business leaders to identify these patterns.
Decision makers should maintain a steady measurement of changes and inconsistencies in inventory levels while avoiding pitfalls of inventory data collection to ensure their planning system is proactive instead of reactive. Inventory forecasting software provides precise and efficient management.
Monitoring products with consistently poor inventory accuracy can help identify the root causes of the data discrepancies and allows businesses to alter their supply chain practices early to mitigate a bad customer experience.