Sep 27, 2016
The evolution of your inventory planning solution
We regularly meet inventory planners who have created their own solution for inventory planning in their business. Most commonly, planners use some combination of data extracts, spreadsheets, and a form of calculations or pivots.
These same people often complain that they’ve created an environment that’s a bit too fragile and they point out that it can be quite easy to screw up, especially if someone else gets involved in the process. They just wish they had an inventory replenishment and management process that was more stable, more accurate, and less time consuming.
An unintended solution
First, we have to ask a couple tough questions. How did they get here? What are the decisions they made that caused their warehouse to become a slave to their master inventory spreadsheet?
Usually, no one decided that this was the right way to manage inventory. Rather, it just develops into this labyrinth of calculations that gets a planner a ballpark look at what needs to be ordered or otherwise addressed.
In fact, this outdated process is something that probably worked for a younger, less complicated version of a company. Maybe that was back when the planner worked closely with a few suppliers or knew exactly what their customers needed. In that scenario, gut feel is about as useful as some high-powered inventory tool, and there’s no doubt that gut feel is more affordable, too.
Your business and inventory have evolved
Let’s be honest here: your business isn’t in that early stage any longer. You have evolved, and the complexities in your supply chain have begun to pile up. Gut feel is more like a guess at this point, and those inventory spreadsheets have become unwieldy. Most planners give in and decide to carry a bunch of excess stock just so they never have to deal with a painful stock-out. Excess stock is an expensive burden in its own right, however, and it can even crush a business’s potential.
The real problem here isn’t stock-outs or large amounts of excess. Those are the symptoms of a bigger issue, which is a low-tech inventory management process that desperately needs to join the rest of the business world in the 21st century. (Just a quick reminder: that inventory spreadsheet of yours is entirely a 20th-century solution. It used to be a “master” spreadsheet; now, it’s evolved into a monster spreadsheet.)
Should you make a change?
There’s no doubt that good intentions and a tight budget lead businesses to various hodgepodge workarounds, but it’s time to move on. In fact, a change is past due.
Now what? You’ve got some decisions to make. Will you keep hobbling along with your old-school solution and simply power through all the problems and costs that arise? If that’s what you choose, ask yourself about future changes and how they will affect your inventory management process:
- What happens when a new complexity is added to the process?
- What if the spreadsheet breaks?
- What happens if the person who knows or built the solution leaves the company?
- Are you actually happy with your current investment in inventory and customer fill rates?
Perhaps you’re ready to build something new and know some coders that can craft a solution from scratch. That’s an option that ought to scare you more than the risks that come with your current spreadsheets, to say nothing of the cost. If you thought your Excel process had evolved into a monster, you should see what some businesses build from scratch. Often, it’s not pretty.
Alternately, you’ve probably asked around and heard some nightmarish stories about replacement solutions that specialize in this space. They tend to be quite expensive and could require major changes in your personnel.
Is SaaS right for you?
That said, there are new options that are absolutely worth researching.
For example, there are now a few inventory solutions that use a SaaS (“Software as a Service”) business model that are changing the landscape, making these sort of products far more accessible to the average business than ever before.
These SasS inventory replenishment solutions open up the market to the growing group of small and medium businesses that have previously been unable to afford such applications. In is no overstatement to say that is a major leveling of the playing field for smaller businesses. We highly recommend you look into these solutions first, as they are far more likely to fit within your budget.