This is the process of determining the optimal quantity and timing of Inventory for the purpose of aligning it with sales and production capacity. Inventory planning has direct impact a company’s cash flow and profit margins especially for smaller businesses that rely upon a quick turnover of goods or materials.
Objectives of Inventory Planning
- Customer Satisfaction
- Forecasting Needs
- Controlling Costs
- Successful Storage
Advantages of Inventory planning
- You know your stock levels
- You can conduct stock rotation
- You can optimize and reduce stock of items that don‘t move that quickly
- You can move you quick moving items to the front thereby speeding up picking
- You can quick identify items that are not moving that you can remove from your inventory
Disadvantages of inventory planning
- It doesn‘t stop staff stealing stock
- It can waste a lot of effort if not implemented and maintained correctly
- It doesn‘t replace incompetent management
- It can be very expensive and the return on investment can take a long time
- It requires a lot of staff training and you may lose some staff on the way
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