Customer appetite seems to change faster and faster. For some industries, that puts a higher demand on agile inventory management. As product life cycles get shorter, the need for faster inventory response time increases.
Managing inventory in pace with change
Conventional wisdom has it that product life cycles are getting shorter and shorter. As a result, brands adopt inventory management practices that respond quickly to change to stay competitive. Fashion brands, particularly, face a big challenge in dealing with consumer taste that changes faster than the weather. The problem is having the agility to change with taste to keep overall inventory turning over as quickly as possible. Without that, companies end up with products that go unsold, increasing inventory costs and lowering gross profits.
A broad indication that a brand is doing well can be its inventory turnover rate. In short, that is the number of times over a given period that a company sells all the products in its inventory. (Turnover can be calculated in a number of ways, including the cost of goods sold divided by average inventory value). However, high turnover can also show a weakness, specifically when a brand clears its inventory by cutting prices. The ideal, of course, is to have high turnover without sacrificing margins.
A significant number of large enterprises noted for their supply chain efficiency are improving their inventory turns. Overall, they’ve taken steps every year to adapt their supply chain to get products faster to market. That’s not an easy task, especially for large enterprises with highly complex supply chains. But it comes down to some fundamentals shared across all business. That includes gaining full inventory management visibility and using historic data about sales and customer behavior. Both help in planning what kind of products to stock up and what to phase out.
Get agile with Cin7
CIN7 keeps stock in line with orders no matter where you sell or hold your products. With real-time visibility across all your channels, warehouse and 3PLs, brands gain control of their business now. And with reports and forecasting tools based on accurate data, they get insight into planning ahead. Click below to learn more about how CIN7 can help make your brand more responsive to changing demand.