Inventory Planning Blog

Inventory Planning in Global Crisis with Advanced Inventory Planning

Posted on Fri, Apr 10,2020@12:48 PM

Advanced Inventory Planning with ValogixCOVID-19 is presenting a challenge we have never experienced before. Supply chains across the globe have been upended. Companies are struggling to make sense of their inventory demand forecasting and stock replenishment planning.  Cases range from plummeting sales to unprecedented peak sales and to longer lead times, to unavailable stock. This may become the new normal. 

Further, the general consensus at the moment, is that the immediate impact as described above will be followed by either an upturn or return to more normalized levels and a gradual return to available stock.  Then there is the unknown question of if the virus will return in the fall/winter and what kind of impact will be felt then. 

A lot of the forecasting at the moment can be considered guesswork, but there is an underlying historic baseline that is helps to looking forward.  In addition, there are several possible scenarios or strategies making it nearly impossible come up with a plan without an advanced inventory planning system. 

It is crucial to monitor and maximize inventory effectiveness, and investing in the right software solution is the best way to do this. Advanced inventory software solutions provide a way to improve a company’s inventory investment while maximizing profits and increasing sales. Advanced inventory planning solutions are known as decision support software. This means they are smart systems that forecast and plan optimal inventory requirements. They are superior to commonly used types of software; standard inventory transaction software and spreadsheets. Many of these solutions are both strategic and tactical tools. They cover long range inventory budget planning down to daily replenishment and problem solving.

Comparison to Spreadsheets

Spreadsheets are manual, time consumingSpreadsheets are manual, time consuming. They do not provide intelligent part mix management and part specific forecasts. In addition, spreadsheets are extremely difficult to update and maintain current data effectively, plus they normally cannot be interfaced directly with enterprise and customer relationship software. Conducting quality assurance on the calculations and models is also difficult and based on a study by a leading international consulting firms over 90% of spreadsheets they audited contained significant errors. These errors led to the loss of millions of dollars.

Comparison with Standard Inventory Management other or Control Systems

Almost every inventory solution is a transaction (accounting) type system. This means they keep track of the physical movement of items on and off the shelf. These are “dumb” systems, meaning they are static and cannot intelligently determine what to stock, project demand, or create a complete replenishment plan. These systems are based on 40 year old plus, methods using ABC as the only part classification technique. They do not have leading-edge Exception Management capabilities which provide "alerts" to the User for unusually occurrences.

What Inventory Management Software can do:

  • keep basic part information like: part number, description, cost, dimensions, etc.
  • track parts movement: received, on order, on shelf, removed from the shelf, etc.
  • provide a basic reorder point and min/max settings
  • record the different bin locations where parts are stored
  • provide an order for new parts needed, using standard reorder point, min/max, and safety stock


What Inventory Management Software cannot do:

  • provide a system generated forecast or offer multiple advanced forecasting methods
  • manage repair parts and their repair cycle (reverse logistics)
  • provide an optimal inventory mix to improve service level while reducing cost
  • offer multiple stocking and reordering policies
  • manage parts specifically required for PM (preventative maintenance) schedules
  • help to reduce overstock and excess part inventory
  • manage by exception and provide key user alerts.


What Advanced Inventory Planning Solutions CAN DOWhat Advanced Inventory Planning Solutions CAN DO: 

  1. forecast parts demand with multiple models appropriate for different demand patterns
  2. plan for unlimited part and location combinations (scalable)
  3. provide advanced calculations for calculating shelf stock and reorder points
  4. calculate the optimal mix based on dynamic demand changes
  5. provide time phased plans and order for both new and repair items
  6. manage by exception and provide alerts to the planner
  7. identify overstock and excess inventory and provide redeployment strategies
  8. plan parts for preventative maintenance schedules
  9. multi-echelon or theatre planning - can plan at every stocking level both real and virtual
    (from master warehouse to stock kept with a field or service engineer)
  10. plan part life cycle, substitutes and supercedes, and end-of-life parts


Combining ERP Transaction Systems + Advanced Planning Solutions

Advanced planning solutions do not replace the existing transaction systems. Instead, they are designed to complement and improve existing software. The best of all worlds is to add an advanced planning solution to an existing transaction system. This provides a more complete, robust system that dynamically plans based on what is happening now and projected for the future.

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Tags: inventory optimization, Inventory Planning Solutions, supply chain planning