Mastering Demand Planning: A Guide to Stocking Smartly
Starting a Series of ’10 rules to keep in mind’ for Demand Planners.
Here’s the first three.
Some Rules to Keep in Mind for Demand Planners
1.𝗗𝗼𝗻’𝘁 𝘁𝗿𝘂𝘀𝘁 𝘆𝗼𝘂𝗿 𝗴𝘂𝘁 𝘄𝗵𝗲𝗻 𝗶𝘁 𝗰𝗼𝗺𝗲𝘀 𝘁𝗼 𝗱𝗲𝗺𝗮𝗻𝗱 𝗽𝗹𝗮𝗻𝗻𝗶𝗻𝗴, 𝘁𝗿𝘂𝘀𝘁 𝘆𝗼𝘂𝗿 𝗱𝗮𝘁𝗮!
Because you think a certain product is going to be hot, doesn’t mean it will be.
For example, don’t stock up on “unicorn onesies” for adults because you think it’s a good idea.
Trust the data and avoid looking like a fool.
Also, Don’t always rely on historical data.
While past sales can be a helpful guide. It’s important to also consider current market trends and changes in consumer behaviour. For example, if the gold prices are high in the market, it is likely that the demand for gold jewellery will decrease.
So, relying on historical data without considering external factors could lead to overstocking.
And lower sales.
2. 𝗗𝗼𝗻’𝘁 𝗳𝗼𝗰𝘂𝘀 𝗼𝗻𝗹𝘆 𝗼𝗻 𝘁𝗵𝗲 “𝗯𝗶𝗴 𝗱𝗼𝗴𝘀” 𝗶𝗻 𝘆𝗼𝘂𝗿 𝗶𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆.
Sometimes, it’s the little “underdog” products that surprise you with their steady demand.
For example, don’t overlook that bulk bin of “fanny pack” purses because they’re not the trendiest thing. They might be the steady seller you need.
Don’t just focus on the best-selling items.
While it’s important to make sure you have enough stock of popular items.
It’s also important to pay attention to less popular items that still have steady demand.
For example, diamond stud earrings may not be the top-selling item but still have a steady demand. Ignoring these less popular items could lead to stockouts and lost sales.
3. 𝗗𝗼𝗻’𝘁 𝗼𝘃𝗲𝗿𝘀𝘁𝗼𝗰𝗸 𝘆𝗼𝘂𝗿 𝗶𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆 𝘁𝗼 𝗮𝘃𝗼𝗶𝗱 𝗯𝗲𝗶𝗻𝗴 𝗰𝗮𝘂𝗴𝗵𝘁 𝘄𝗶𝘁𝗵𝗼𝘂𝘁 𝘀𝘁𝗼𝗰𝗸.
Overstocking leads to wasted money, and nobody wants that. Instead, use demand forecasting to make sure you have the right amount of stock to meet demand.
For example, don’t order 10,000 “fidget spinners” because you’re afraid of running out.
You’ll be stuck with a warehouse full of them.
Don’t overstock items to avoid stockouts.
Overstocking can lead to high inventory carrying costs and markdowns.
Instead, understand demand and order enough stock to meet that demand.
For example:
You expect a particular design of gold necklace to have a high demand for the upcoming marriage season. It would be wise to order enough stock to meet the demand without overstocking.