The Truth About Demand-Driven Inventory Replenishment
The Missing Component in Replenishment Software
Demand-Driven Inventory Replenishment Approach sounds nice. Moreover, if your inventory replenishment software relies on demand forecasting and include demand concepts to figure out which items to order, when to order them, and how many to order. Tell us have you reached perfection? Sadly, most inventory replenishment software apps are missing a critical component – Profit. Furthermore, most Inventory Replenishment software was written to focus on meeting plan and staying in-stock. A quick review of the number of retailers who have gone away or had store closings in 2023 highlights the success of that strategy.
Demand-Based Inventory Management: A Strategic Approach
In reality, inventory is money, and how you put that money to work will be seen in your results. Some days, it is smart to be in certain investments and some days it is best to sit out and wait. That is a key concept to achieving a demand driven inventory management process. Sound strange – let’s test the idea with a popular business executive’s story.
The Success Strategy of Shark Tank’s Kevin O’Leary
Heralded businessman Kevin O’Leary is often quoted saying he views his money as little, tiny soldiers. He sends them out every morning with instructions to take prisoners and bring them back to him. This philosophy is one of the key things he credits with his success.
Read more on the ROI found by improving Your Demand Forecast and Learn a few methods to calculate that ROI (note we did not say ‘sales’ forecasting). Click here to learn- Proof: Improving Forecast Accuracy delivers High ROI
Don’t Let Your ‘Soldiers’ Become Casualties
When you send your money soldiers out in the morning, if they are simply carrying inventory that isn’t moving, they are casualties. Some ‘soldiers may come back a few weeks down the road, but never as many as you sent out. This is a problem, and a recipe for lower returns on your investment. To make matters worse, these casualties could easily be avoided.
By using inventory forecasting for your Demand Driven company, you’re letting your investment do the best possible work. You’re reducing your overstock costs significantly. Further, this ensures that you have enough products in stock to meet customer demand and prevent them from leaving without making a purchase.
Hidden Software Agenda to Trick You
Because you have product location forecasting, you might automatically think that you have a bottom-up system. If the buy signal comes from the plan or open to buy, which is prominent in software today, you have a top-down system. From a top-down perspective, the system will assess all products and locations having a forecast. Keep in mind it is from a top-down point of view. If the flag to create a purchase order is based on plan and budget, you have a top-down system. The key to understand is where/ why the buy signal was delivered by the software. A bottom-up, service system looks at each product/ location and builds the order based on individual needs and order optimization math (how much to carry).
The only reason software companies explain it differently is they know people want to buy a bottom-up, service driven system that use demand driven processes. To switch from the traditional top-down, plan-based approach to a bottom-up, service-based model, software companies will need to completely rewrite their programs. This is an expensive idea for both inventory replenishment software companies and their legacy customers. Besides, True Demand Driven Inventory Replenishment requires a bottom-up service driven process. Moreover, this approach ensures customer satisfaction and maximizes your earnings by utilizing the tin soldiers – dollars more profitably.
Build Your Money Army from the Bottom-Up
By making your inventory management more efficient, you’re able to grow your little money army. Efficiency in inventory management leads directly to higher profits, and less inventory needed on hand. Even better, you can do all this with us in just 30 days, as we take significantly less time to implement iKIS than other inventory management solutions.
Demand-Based Approach Allows Your Money to Work for You
Going with us also means less money invested in your demand forecasting solution, as we charge as much as 90% less than other solutions. To find out how we can help turn your tiny money soldiers into warriors that will bring back significantly more prisoners, sending your profits up into the stratosphere, Contact Us.
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Stuart graduated from Auburn University, with bachelor of science in business administration.
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