How to plan your stocks in a simple way to meet demand

The steps to take to plan your stocks in a simple way

Demand planning is a very useful tool if you want to improve your processes. This is essential because most companies have predictable guidelines.

We are not going to fool ourselves, having an oversized stock is an unnecessary expense, both in terms of merchandise and maintenance. On the other hand, you cannot afford the possibility of stock-outs either. This means that you have to plan realistically.

What happens is that, in many cases, there is no working pattern. And, however much it is planned, there is always an element of unpredictability. This has happened with the Covid-19 pandemic and other unexpected events. In any case, and in the long term, stocks must be adjusted to demand. To do otherwise is to waste resources that can be used elsewhere.

The basic idea, then, is to plan for the right level of stock to facilitate sales and reduce maintenance costs. In short, to optimise stock management.

What elements do you need to keep in mind in order to keep your stocks in line with reality? It is good to take into account three issues that make a difference:

1. Use specialised tools

Computerisation of stocks is no longer an advantage, rather, by not incorporating specialised tools, there is an opportunity cost. Being efficient in this area is key to your company.

ERP (Enterprise Resource Planning) are designed to control all inputs and outputs in your warehouse. And, what's better, you can monitor the process from any type of connected device. You can also activate different modules depending on the type of activity of your company.

IT solutions allow you to make a real-time enquiry, so that communication between departments and workers will be more fluid. In addition, automatic modifications can be made, which improves the quality of the information received. In short, it saves time, money and reduces the margin for error.

For example, SAP Business One offers a specific feature for stock management. You will know what you have at any given moment, the prices, past balances and you will have the option to place orders.

2. Implement a methodology adapted to your company's idiosyncrasies

Stock planning has to do with the characteristics of each company. And it should be noted that the same formula is not always used. In making the decision to implement one methodology or another, you have two basic guidelines:

Just in Time System

The "just in time" system, of Japanese origin, is suitable for companies that manufacture high-cost, value-added products. You will only have what is strictly necessary for production and is typical for industrial companies. This is an option to plan your inventory according to demand, but it requires a high capacity for coordination and minimising failures.

Furthermore, this inventory planning will force you to work with highly trusted suppliers. Think that these cannot fail you, otherwise the whole scheme falls apart. Although this is a very successful system in sectors such as the automotive industry, it needs to be well implemented.

ABC Analysis

On the other hand, you may be interested in making great purchases because you have certain demand peaks. This is a reality that occurs during the Christmas campaign and several commercial or retail companies increase their stocks with this time in mind. A good way to plan consciously and with criteria is the so-called ABC analysis, which orders products according to their added value and sales frequency.

In the first case, we will discuss high-value products with low sales frequency (A). The second case is for products of average value and frequency of sales (B). Finally, low value products with high sales frequency (C) will be highlighted. It is clear that each type of company will have a predominant level of sales for certain products.

There are several possibilities and therefore you have to plan your planning on a case-by-case basis. Be that as it may, this is a good way to bring order.

3. Check the effectiveness of your stock management

The effectiveness of inventory management must be monitored. This is a definite way of gaining competitiveness.

Ideally, stock management and planning should be aligned with previous years. Big Data provides a torrent of information today that allows you to find out the following items:

● Total sales for the previous year. This is the most generic magnitude, but it gives a general idea of the storage capacity you need.

● Supplies consumed during the previous financial year.

● Flows generated during the previous month or during the same month of the previous financial year. This magnitude is of decisive importance, especially when it comes to companies with high seasonality.

● Evolution of inputs and outputs. In connection with this, you can find out how long a good is in your warehouse. It would be possible to even know the expenses generated.

In short, with all these details you will have a guide to carry out conscious planning. This will allow you to make changes on the fly. And, although the possibilities of errors will not be zero, they will be minimised.

Conclusion

Planning stock on demand is a basic premise, but implementation is less so. Knowing how to use the right tool, the right methodology and how to adapt to changes is crucial. Therefore, management capacity becomes key.

Today it is possible to plan your stocks in a simple way and guarantee an intelligent management. SEIDOR Business One tools are adapted to all types of companies. Do you have any questions about the software you need? Contact us!