We have already defined the Assortment Strategy that we will adapt and the Tactics to carry out. The next step is to establish how to execute an Assortment Strategy. An essential component of inventory management is precisely the control and timely preparation of orders to suppliers.
Execute an Assortment Strategy
At this stage, it is essential to calculate if there is sufficient inventory for the execution of the sale plans. For this, it must be clear what part of the assortment should be kept in inventory and in what quantities. We must also consider whether the orders to arrive can cover the needs. Any delay in shipments by the supplier could lead to an inventory deficit. This could also cause a delay in the placement of purchase orders.
Here are three recommendations that you should keep in mind when executing an Assortment Strategy:
Having visibility regarding the current and future inventory situation, allows proactive management of the inventory, anticipating any decrease in the availability of units, gaining reaction capacity to prepare for the effects of the inventory breakdown. In some opportunities, the solution will be to resort to the alternative provider, while on other occasions we could privilege the delivery to the permanent clients over the sporadic clients. Having precise what the decision-making mechanisms will be in the face of these eventualities, allow us to have a more macro view of the problem and its impact within the company.
In an organization where different departments must coexist with different goals to be met, it is essential to be able to inform all the intervening parties about possible reductions in availability, and the palliative plans that may be necessary to reduce the negative impact. For example, if an order had a shipment delay, it will be required for the reception team to work overtime the day the cargo arrives in the warehouse so that the next day at the first hour all the orders can be sent to the customers and it’s thus fulfilled with the release at risk.
Being transparent in advance when we will be flexible with extreme orders, will help us not to fall into emotional decisions of the type “it is better to order in hand than 100 to arrive” and that can effectively cost us dearly with other customers: increases in orders dissatisfied, loss of reliability, lower market share.
Many times the low availability of units is not due to delays in purchases or shipments. Sometimes they are the same customers that can produce essential inventory breaks, which can have a significant impact within the company. If one of our customers sends us an order much more substantial than usual, should it be dispatched? Even if that means a decrease in availability to other customers? Also, if the impact is to assume two months of inventory breakdown?
Are there policies for extremely high orders in your company?
To what extent can a client affect planning within the company?
How are breaks managed with other customers?
Is there proactive inventory management?
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