As things slowly begin to shift back to normal, most customers and suppliers are probably just happy about that! They are not thinking about next week’s, let alone next year’s, inventory and their ability to plan for it. The problem is that factors like company closures and the decrease, or in some cases increase, in demand over the past few months are going to have a major impact on your next's year's forecasting.
Right now, you are probably thinking, “Our inventory is in great shape, so we are fine.” That may or may not be the reality. Today’s inventory may look great, but what happens next year when customers are running at full force and that demand of 100 for March, April, and May this year returns to 250 like in previous years? What steps are you taking today to account for that?
What You Can Do to Prepare for the Future
If you are fortunate enough to own forecasting software, you are now faced with a couple of options. Do nothing, hoping that inventory levels will work out, or begin moving into “clean-up” mode. As a former purchaser, I know that those words probably just made you cringe as much as I did while typing them. We often think of clean-up as busy work and normally do not consider the impact it has on our business. These tasks are often mundane and overlooked, which leads to “unforeseen” circumstances later.
So, what are these tasks you ask? With most forecasting software, you can manually manipulate the data to include, exclude, or even adjust the quantities. Now is the time to begin making those adjustments while the different factors are fresh in your mind. This might mean running your reports more often, filtering those reports to allow for a more in-depth review, or even running different item groups or vendors. You may even enlist the help of your sales team. After all, who knows the flow of the customer better than sales, right? Purchasing is not a one-person or one-team job, it takes the whole company being invested to keep inventory at the optimal level for your business.
Now, what if you do not have forecasting software? I bet you are thinking, “Oh here comes the sales pitch!” Not exactly. As much as I love forecasting, I know that it is not a good fit for all companies and business models. So, should you just throw your hands up and say, “Well, that’s it. We’ll either have too much or not enough. It is what it is.” That is not the case either!
Forecasting is an added feature but that does not mean you are stuck without it. It just means you must look at your data a bit more closely. Maybe you find that you need to adjust your reorder points (or even add them). Maybe it is time to start looking into forecasting (there’s the sales pitch).
Whatever path is right for your business will become clearer over the next few months. Now may not only be the time to review your inventory but also to start talking with vendors about pricing and contracts. Hey, maybe they have some extra stock that they would be willing to part with for a good price!
We Are All in this Together!
The next year or so will be a learning curve for most of us; so, if you find yourself having either too much or too little inventory, know that you are not alone. These are uncharted waters for all of us, but the right tools and staff can help navigate the way.
One strategy that might help is to implement Vendor Ratings at your business. I will be giving a webinar very soon on this topic that I hope you will consider joining!