The New Reality of Inventory Management

In other words, why manage demand planning details at a level you can't control and that doesn't allow you time to read and react to your business. Maybe it's time to let go of the old model.

I believe the new cross-channel planning model is to make your best base-level plan at the highest possible level of aggregation — e.g., a seasonal or quarterly plan. Plan demand in four or five annual increments rather than 40 or 50. Then add a second planning layer to adjust demand for known promotional activities (including catalogs) and known anomalies or changes from prior periods. Certainly consider seasonal sales trends from one product to another. Finally, put excellent tools in place to recognize changes in demand trends and quickly respond to changes with revised forecasts and inventory purchase or liquidation actions.

Don't get me wrong, I'm advocating for better, not less planning. Inventory is your largest expense and requires thoughtful planning, always focused on maximizing order fulfillment, cash flow, sales and profits. In this new planning paradigm, you care more than ever. You can actually free up time from details to focus on high-impact inventory planning decisions.