Optimize inventory levels using the power of sales trend data

by | Mar 21, 2023 | Order Management, Suppliers, Supply Chain

Well-managed inventory leads to higher profits while poorly managed inventory usually results in a loss. Whether that loss is financial in nature, a loss of customers or lost reputation, its effect is felt throughout the supply chain. 

Suppliers need to maintain optimal levels of inventory to prevent stockouts and overstocks, but learning what levels are best and staying on top of evolving trends is difficult. To prepare for today’s world of fast-changing demands, it’s important for suppliers to evaluate sales trends when planning inventory.

What are the disadvantages of stockouts?

As a consumer, you probably don’t like to see the words “out-of-stock” on an item you want to purchase. When that happens, you might visit another site or store, or choose a different item altogether. Either way, someone is losing out on a potential sale. 

No matter where the fault lies, your business relationships suffer when there are stockouts. They result in a poor customer experience, which may keep consumers from coming back to your brand in the future. Your retail partners may receive the brunt of customer dissatisfaction when items are missing from their shelves or online stores, leading to a breakdown in trust. 

Aside from the lost sales, stockouts cause an additional financial loss. In order to catch up with demand you may incur production costs, paying for things like overtime, production rush fees and expedited shipping. 

What are the disadvantages of overstocks?

On the flipside, it is just as risky to have excess inventory on hand. A warehouse full of slow-moving product ties up your open cash flow and paralyzes your ability to bring in new goods. Your aging assortment quickly becomes dated in the eyes of your trading partners, and they are likely to look elsewhere for in-demand products.

In order to offload excess and undesirable goods, you will be forced to look for discount partners and sell your inventory at a loss or even pay to move it to offsite storage. Nearly everyone in the world of trade has felt the pain of unequal supply and demand. It’s a delicate balance that can quickly tilt unfavorably and be difficult and costly to correct. 

Evaluate sales trends to avoid inventory issues

In order to prevent these and other costly inventory issues, you need to be proactive about evaluating sales trends. It’s vital for you to understand the lifecycle of your product after it leaves your hands in order to make smart and proactive decisions in your inventory planning. 

Accurate, applicable, real-time metrics will give you the power to easily identify sales trends and make business decisions for the future. With the right data in the right format, you can learn how geography, demographics and seasons are impacting your sales. 

Keep an eye on market trends to ensure your products meet the demand at appropriate levels. In doing so, you can gain a greater understanding of the optimal amount of inventory to keep on hand. You may have to learn as you go, but there are options in the market that can help you monitor trends and inventory levels. 

These tools will give you the full picture on your product’s lifecycle, from purchase order to point-of-sale. With this powerful knowledge, you’ll optimize your inventory, understand your market and be the expert in the eyes of your trading partners. 

Don’t be afraid to outsource if the logistics of collecting and evaluating sales and inventory data isn’t within your wheelhouse. Take advantage of the expertise that exists in the market and bring on a third-party to assist where needed. You’ll see increased efficiency across your business, giving you the tools and confidence you need to succeed. 

Michelle Lord
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