The Truth About Demand Driven Inventory Replenishment

Inventory Replenishment Software’s Hidden Agenda

Demand Driven Inventory Replenishment sounds nice. If your inventory replenishment software uses demand forecasting and incorporates demand concepts to calculate what products to order when and how much to order, tell us have you reached perfection? Sadly, most inventory replenishment software apps are missing a critical component – profit. 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 in the past 3 years highlights the success of that strategy.

It’s No Secret- Inventory is Money – What’s Your Return Rate?

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.

Shark Tank

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, and allowing it to bring more back into the company at the end of the day. You’re not wasting nearly as much money on overstock, as well as ensuring that you run out of stock much less frequently, avoiding a bad reputation with customers, or would-be customers walking out the door without having made a purchase or not as many purchases as they’d wanted.

Hidden Software Agenda to Trick You

Because you have product location forecasting, you think automatically that you have a bottom up system. If the buy signal comes from the plan or open to buy, which is 98% of software today, then you have a top down system. The top down system will review every product / location with a forecast but 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. For software companies to change from top down, plan based, over to bottom up – service based will requires total re-writes. This is an expensive idea for inventory replenishment software companies that is also costly to their legacy customers. True Demand Driven Inventory Replenishment requires a bottom up service driven process to keep customers happy and maximize your profits by using the tin soldiers – dollars in the most profitable process.

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 Driven Inventory Replenishment 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 D

Stuart Dunkin is a strategic visionary who leads by calling on his broad range of experience as a former retail executive as well as a consultant for top retailers and for the E3/JDA software company. He founded Data Profits to solve a real-world problem plaguing retailers today – the disjointed relationship between supply chain data, people and business goals. He has experienced first-hand the challenges and frustrations that occur when decisions are made based on wrong data, which often leads to the wrong actions being taken with crippling results like overstock, out-of-stock, and increased working capital.
Stuart graduated from Auburn University, with bachelor of science in business administration.