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What’s Inventory Planning?

Did you know? Around 43% of small businesses in the United States fail to track inventory or monitor using a manual system. Keeping tabs on your stock levels is vital for inventory management and order fulfillment. Do it incorrectly, and you risk facing stockouts, which hold up your order fulfillment process.

In the retail sphere, stockpiling merchandise and simply “seeing what sticks” or, even worse, hoping for the best is by no means an efficient strategy. If you want to generate sales and move products, you have to be organized and plan everything you buy in your store ahead of time.

The team here at Upscribe believes product subscriptions pave the way to inventory planning success. So stick with us and we’ll show you through the ins-and-outs of inventory planning.

What’s Inventory Planning?

Inventory planning involves analyzing and predicting how much of your specific product needs ordering to implement forthcoming sales effectively. While the idea may appear straightforward, inventory planning and control are vital – they help evade possible problems with transactions and fulfillment, ensuring your customers remain happy.

To carry out inventory management successfully, you must have a comprehensive understanding of which of your products must be purchased and how many are needed to sustain enough stock.

It’s imperative to estimate demand for your products in line with past trends otherwise you may waste your precious pennies on overstock. You’ll also be able to forecast how much inventory you need to prevent lost sales, unhappy customers, and stockouts.

What’s the Difference Between Demand Planning and Forecasting?

Demand Forecasting

In a nutshell, demand forecasting is an estimation. For example, to predict how much a company will sell in the approaching weeks or months, they may explore seasonal demand, past trends, impending marketing campaigns, market research, and customer expectations.

Demand Planning

Instead, demand planning is a whole lot more reactive. While demand forecasting determines what will probably happen, demand planning makes it happen. In other words, it takes that prediction and ensures every section of the supply chain functions in the right way, with the least expenditure and most productivity.   

The Benefits of Inventory Planning and Control

If you’re a business owner, you’ll want to watch your inventory very closely, as it normally symbolizes the second largest cost to your company. For inventory planning and control, you’ll need to devise forecasts to ascertain the amount of inventory available for your consumers.

Inventory control is when you do some number crunching on all your company’s inventory items and maintain them. There are several advantages to this, including:

  • Increased revenue and profit margin
  • Improved visibility
  • Superior effectiveness and productivity
  • Happy customers 

Increased Revenue and Profit Margin

If you don’t manage your stock levels correctly, this can result in revenue losses. To prevent issues like overstocks and stockouts, it’s your job to forecast and correct how much inventory you need. To reduce your costs, you can cut supplier lead time by enhancing inventory management in your supply chain. Adding subscriptions to your store through Upscribe will empower you to develop and prosper in today’s rapidly evolving ecommerce landscape.

Improved Visibility

If you manage your inventory planning meticulously, you make better, speedier decisions.

Monitoring inventory becomes clear-cut, as you’re able to identify how many of your products are in the warehouses. Plus you can check how many orders arrived, what was distributed, what was returned, as well as define the potential stockouts.

Superior Effectiveness and Productivity

Arguably, if you manage your inventory control efficiently, this means improved storage management, and, therefore, you’ll easily be able to find where these products are situated, stored, and boxed. It also leads to your buyers receiving your products on-time, or even before their delivery date.

Happy Customers

If you have the correct number of inventory to hand, fulfilling orders will be a seamless, fast, and smooth experience. In turn, this develops customers’ trust in your products and helps

you transform a one-off buyer into a repeat customer. If you manage your inventory planning accurately, the more aligned you’ll be with your buyer’s expectations about the accessibility of your products.

The Trials of Inventory Planning

Problem #1: Tracing Out-of-Date Products

This is a common occurrence in most businesses. You won’t sell all your materials and products – and chances are you’ll have a good deal of obsolete material on your hands. This is the stock that you don’t plan on selling. Over time, inventory managers will discard these obsolete materials.

But, if there’s ever a need for these end-of-lifecycle products again, many inventory managers don’t use obsolete products, instead choosing new materials instead. Not only does this cause a rise in waste material, but it also leads to an increase in costs.

Answer: Invest in a stock control application. This type of control system detects products that have reached the end of their life-cycles and ensures they’re used sensibly and appropriately. Thus, using this application will enable inventory managers to manage stock levels correctly. 

Problem #2. Hard-to-Find, Inaccurate Inventory

Consider the complications of detecting or finding stocks in your inventory – there’s no way you’ll be able to distribute your products punctually. Customers won’t look kindly on this and it can lead to poor customer retention. Inadequate visibility of your inventory can affect your business, no questions asked.

Answer: Invest in a real-time inventory planning system. Implementing Lot Tracking can assist your warehouse employees to:

  • Deal with stocks effectively
  • Help with real-time data
  • Streamline the process
  • Boost inventory efficiency considerably

Problem #3. Maintaining Overstocks

Purchasing new products and failing to sell the existing ones can drastically affect your business revenue. If you don’t control your stock well, you’ll experience problems. If you decide to carry this out manually, there’s a chance that some products are missed. This could lead you to buy more items than is needed.  

Answer: Introduce a stock auditing system, so you can carry out frequent stock audits to determine which of them are used or unused. This will boost your inventory proficiency and, ultimately, save you time, money, and drive revenue.  

Inventory Planning Tips to Boost Your Success

Automate Monotonous Inventory Chores

Take the headache out of inventory planning by automating steps in your inventory planning process. So, rather than physically searching for information such as a product’s sell-through rate or products sold, let your inventory management system calculate things on your behalf.

Perform Frequent Inventory Calculations

The real secret to successful inventory planning is accurate data. So, reduce inconsistencies as much as you can by actually counting your inventory regularly. In doing so, you make sure your inventory levels in your system tally with what’s physically in the store.

Keep Record of All Product Info

Keep track of all product information for materials on your inventory such as barcode data, lot numbers, SKU codes, suppliers, and countries of origin. Think about monitoring how much each item costs over a specific amount of time so you fully understand factors that may impact the price, such as seasonality and shortages.  

Systemize your process

Let’s look at the eight inventory management steps that any inventory plan worth its salt is founded on:

  1. Goods arrive at your facility: Your products enter your inventory.
  2. Goods are examined, sorted, and stored: Choose whatever strategy works for your storage space, whether it’s drop shipping or cross-selling.
  3. Your inventory levels are checked: You can either do this via an inventory cycle count, physical inventory, or a perpetual inventory software.
  4. Customers make a purchase: Your buyers place an order in person or via your online store.
  5. Orders are accepted: Usually, your POS system will do this automatically. If you use drop shipping, this is when you hand the order over to your supplier.
  6. Items removed from stock: You can find these items by their SKU code then they’re boxed up and dispatched or delivered straight to the buyer’s door.
  7. Stock levels are revised: If you use a perpetual inventory application, it’ll tweak your stock levels automatically. When you take an inventory manually, you can also physically track each sale or identify alterations.
  8. Inventory levels prompt reordering: You can get the items you need to meet demand effortlessly by working out your reorder point for every item you sell.

Implement Product Planning With Subscriptions

It’s easy to implement product planning by developing your subscription offerings, as they allow you to bundle together complementary products. You can also analyze your sales figures for individual products versus subscriptions. 

Upscribe, helps you assess your customers’ purchasing behaviors, so you don’t have to figure out which products constantly need replenishing due to repeat purchases. You can also bundle products that are performing well with those that always have excess stock. 

Source: Upscribe

Inventory Planning Methods to Consider

While there isn’t any definitive way to plan your inventory, there are a few methods to pick from. But all come with their pros and cons. We’ve pulled together some of the best inventory planning methods adopted by leading online companies:

The FIFO Method

In other words, this means first in, first out. This management method involves selling or disposing of products that were acquired first. For example, if you’re retailing perishable items, FIFO is perfect, as you’re able to record the date that each item was obtained and

sold. Just be sure to keep track of expiration dates.

To do this successfully, organize your storage room or stock so that it’s effortless to implement FIFO. For instance, grocery stores organize their freezer products so that the oldest purchases are displayed right at the front.

Economic Order Quantity (EOQ) Method

The economic order quantity (EOQ) model is great if you’re passionate about running a lean

warehouse. You have to work out the ideal order quantity to reduce logistics expenses and optimize storage space.

It isn’t difficult to figure this out – all you need are these three variables:

  • The total cost of the holding inventory (holding costs)
  • Yearly demand
  • Order cost

Then you can use the below sum:

EOQ = square root of: [2(setup costs)(demand rate)] / holding costs

Let’s say you were selling a popular children’s toy to shops and that you had a setup cost of $750, with a holding cost of $100 every year. Now let’s say you had a yearly demand of 10,000 units. Your EOQ would be worked out as follows.

Square root of: (2 x 10,000 x 750) / 100 = 38.7

That means that a minimum order should be for at least 39 toys (rounding up), in order to minimize your costs.


Make smart inventory planning choices, and you’ll no doubt be on the road to success. The only drawback is that it entails handling numerous moving pieces while paying close attention to the data and previous inventory trends.

Want to spend less time on inventory planning and more time growing your ecommerce business? Upscribe is your one-stop inventory planning platform. We empower you to attract, expand and preserve your subscribers to make better business decisions so you can scale your business. How about scheduling a demo?