Inventory Planning Blog

The State of Inventory Planning - Chapter 4

Posted on Tue, Sep 04,2012@05:00 AM

supply chain management, web based inventory planning, valogix, SaaS


Intelligent replenishment inventory planning includes several components, of which forecasting is just one element. Complete, automated planning systems handle all behavior including low volume items as part of a total process. Advanced planning solutions also incorporate inventory optimization, which dramatically improve replenishment planning. Why? Because optimization considers the wild cards in planning. It considers how random the demand of an item is, i.e., standard deviation and service level objectives, and it does it for each item, at every location, leaving nothing to chance (no spreadsheet can do that!)

Time-phased planning examines a sequence of periods, looking at projected demands and replenishments, and determines both the timing and quantity of future orders. Other factors that should be included in the calculations are:

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  • target performance (Customer Service Level)
  • forecast (future anticipated demand)
  • replenishment lead time (time to get part back in stock)
  • planning frequency (frequency of actual planning process)
  • planning horizon (length of future covered in planning process)
  • planning buckets (days, weeks, months, quarters or variable)
  • demand variance
  • supply variance
  • unit cost
  • fixed cost of placing a replenishment order
  • inventory holding cost %
  • backorder or stock-out cost


web based inventory planning, Saas, Valogix, Coud, inventory planningAdvanced Inventory Planning Solutions:

  1. are dynamic, changing automatically as business conditions change – manual intervention is not required. This saves time, money, and effort.

  2. account for many variables insuring the right coverage without over-or under-investing in inventory.

  3. calculate an optimal quantity which means you save money without sacrificing service by procuring or producing just the right amount of stock.

  4. replace the need for manually reviewing every item and manipulating data against the best guess approach.

In our final post in this series, we’ll explore how automated advanced inventory planning tools can put you on the right track fast.

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Tags: Inventory Planning, SAP Business One, SaaS, NetSuite, Supply Chain Managment, IBM, web based inventory planning, Sage, Valogix