What are the most effective inventory management strategies for forecasting and budgeting in Merchandising?

For budgeting and forecasting, ABC technique is much effective, where products are categories as per it's need and priorities as per demand. Major budget/stocks are allocated for those products that are greater in use/demand. Reorder policy is also adopted per set safety stock level.

I think we have first to work on demand forecasting throughout Utilize historical sales data, market trends, and customer insights to forecast future demand accurately. Further more put on consideration the marketing calendar upon the item type and make MOQ ( minimum order quantity) for each item’s and focus at your management on aging stock and fast moving items to arrange your tactical between the replenishment and clearance for aging stock too ..

Based on my successful experience in Inventory management, I list down below 3 important strategies for effective F&b merchandising :- (1) Identifying Target audience w.r.t. volume, such as country/state/area/season/people/age etc. (2) Regular marketing study of consumer taste & their purchasing power - (past & expected) (3) Our own Historical cost data for part 2-3 years which would exhibit Product wise profitability, lifespan of product. I believe, any study on F&b would never be invalid on estimation, if its based on many diverse Data. eg In India, we had our F&b study based differently for North of India then South & then further break down to age/trends/pricing etc etc.

Data-Driven Forecasting: Leverage historical sales data, market trends, and advanced analytics to create accurate demand forecasts, ensuring better alignment between inventory levels and customer demand. Seasonal and Trend Analysis: Conduct thorough seasonal and trend analysis to anticipate fluctuations in demand, allowing for proactive adjustments in inventory levels based on upcoming promotions, holidays, or fashion cycles. Collaborative Vendor Relationships: Foster strong partnerships with vendors to improve lead times, enhance flexibility, and negotiate favorable terms, optimizing the supply chain and reducing the risk of overstock or stockouts. Dynamic Replenishment:

for budgeting and forecasting, I would recommend starting with historical sales data, market trends, and considering shifting events. Monitoring sales, margin dollar and percentage to at full pop, promo and clearance to make sure the revenue if profitable. To ensure inventory and demand is aligned, i would work on OTB for each category on a weekly basis if time permits. I would work closely with my vendors to ensure strong relationship. Request for contribution dollars where promotions are needed or RTV if an item is not performing or asking for replacement with a key performing item. Optimizing transit time and cost has also played a great role in an agile market.

For the effective inventory planning , Sales and stocks must always be in the balance. Maintaining the stocks at the minimum and keeping the stocks replenished as per the off take of the goods. And the most important is keeping the vendors up to date

For inventory planning, i always suggest to have an extended week of supply for best performing items and keep a close eye on turn rate for new items/seasonal and items with softer sales.

Strategic and well designed collaborative merchandise planning plays a crucial role in maximizing inventory investments. By adopting industry best practices, promote strong collaborations across teams, and harnessing data-driven insights (qual and quan), you can enhance inventory optimization.

Continuing re-classification of ABC at regular intervals helps in identifying trends early on. Trends up and trends down both. Which are critical to ensure stock is invested back into sales.

I would say pay attention to work your customers want and what is really selling keeping those items in stock and keeping only the minimum of soft selling items. Also making sure to buy it while it is priced low to increase your margin of sale and lower your waste of non selling items.

Merchandising is mainly about selling RETAIL goods including FMCG. The trick is to maintain norms/bins and keep minimum inventory at Point of Sale (POS). Simultaneously ensure rapid replenishment of stocks which are consumed from the bins. Real time visibility of inventory at retailers POS will be needed. This would also entail appointing more wholesalers and distributors who can service retailers in a larger geographical area. Scope of ERP distribution module will have to be extended to tertiary level of customers and end consumers.

I think that the best way to manage inventory within big company is to separate inventory into groups of busier stores versus medium traffic stores and slow traffic stores. Especially basics and supposedly never out of stock items which are actually always out of stock. I also believe that the top 5 stores should have off sites of basics and best sellers to increase sales and satisfy demand. I also believe that hi ticket and more specialty items should be monitored for the first 4 weeks and transferred to higher performing stores that can sell these items faster, to avoid sales and markdowns and increase full price profits.

I would suggest daily monitoring and weekly reports to review Sales $/%, Margin $/% on regular sales, promotional sales and clearance to ensure OTB is given to the right Class of items - Planning and Supply Chain to work closely to ensure the money is best spent.

Mostly there should be demand first....then other things will work.....then it come to budget...then inventory......then time ....

Understand that Making a decisions is important. Often extra time spent on high accuracy costs more than taking a decision at the right time. Seek to understand WHY, something worked and others did not, and learn from it. It helps to make next decision easier.

Something I've found very helpful and I feel has become a bit of a lost art is detailed daily notes on high selling trends, as well as low value days. Have answers to specific questions. What was the weather like? Was there an event in the area? These things help with future planning, and as you see things trending around your business you can plan for future outcomes.

In general, a business always has to measure the trade off between capital invested in inventory and potential losses due to out of stock situations. The key determinate for the best possible inventory management systems are ordering and production lead times. The longer the lead time, the greater the forecasting accuracy needs to be, resulting in greater safety stock buffers needed to counter statistical variability. In contrast, the shorter the lead times the less safety stock will be needed within the SC pipeline.

In retail business, i highly recommend to evaluate buyers and considering ranking them if some are performing better than the others by giving each buyer an accuracy rate. This is due to the fact that some buyer can be more optimistic than the others when it comes to planning sales (reg, promo, clearance).

Understanding your planned sales and looking at your forward cover , do you have enough stock to achieve your planned sales. Understanding events that influence your sales such as promotions, gift with purchases, your holidays and other big marketing drives.