Inventory Success Requires Systems, People and Process

Often, while working with Direct Tech's current and prospective customers, I'll hear the age-old question: "Can't the system just do that?"

If only! On occasion, it really is that easy. Computer software is great for solving consistent, recurring tasks where the rules can be defined to yield repetitive answers. More often, however, the answer is "it depends." Merchandise and inventory planning is a combination of art and science. The science is programmable, but the art is a different matter.

For example, with demand forecasting in place, it's fairly simple to program an automatic weekly inventory reorder for delivery four weeks in the future, and specify that the order include six weeks of supply on arrival. It's straightforward math. Easy to program and deliver every week. Piece of cake.

Now factor in that phone call from the supplier — the one that announced a two-week manufacturing shutdown or a delayed shipment of raw materials. Suddenly, that automated purchase order can't be released. You need to intervene and adjust for the supply interruption, but you're swamped with seasonal plan reviews and your whole week is tied up in finalizing next season's plans. There aren't enough hours in the day to get everything done, yet you need to ensure that critical priority actions aren't missed.

Let's recap: The system is programmed to do the majority of the work, but its output is only as good as the reliability of the input rules (e.g., reorder lead time). Now the planner (you) has information that doesn't jive with those rules; an adjustment is needed. But alas, you don't have the time.

The answer: successful inventory planning demands inclusion and coordination of three distinct components.

• Systems: Merchandise and inventory planning tools to do the heavy data lifting. Recognize that your software is governed by rules that can't solve for every condition.
• People: Trained staff who understand your system's rules and outputs and can be available to respond to changing conditions.
• Processes: Adopted procedures, including targeted exception reporting, that enable the right work to be done at the right time. Once in place, they ensure that priority decisions occur even in the midst of a hyperbusy week.

High-performing retailers understand this. With all three bases (system, people, process) covered, you can succeed with inventory planning — at its usual breakneck pace.