Inventory planning sometimes seems like a no-win proposition. Too much or not enough, each scenario has a serious impact on a businesses’ reputation, efficiency and profitability.
But you can achieve optimal fulfillment, forecast and inventory turn results through the alignment of the appropriate processes, systems and most importantly, people.
Through my experience in hiring and developing retail teams, I have identified key professional qualities inherent to the most successful inventory planners. These are my top 12:
Quantitative analytical skills
There is no substitute for strong analytical and logical thought process as a key component of a planner’s mindset. They need to have a proclivity for working with numbers, reports and data analysis.
This does not mean inventory planners have to be statistical experts. But they must have an understanding of business math and the ability to relate to and form conclusions using numerical data.
It is also imperative to possess the interest and aptitude to understand and use the systems and programs that support the planning and decision-making process. A successful planner is proficient with planning systems, but also knows that systems have limitations and do not always account for unanticipated variables and evolving trends. This is where good judgment and experience become critical to a successful process.
An astute planner has an understanding of the definitions and formulas of the key inventory metrics. They should know what it means to “turn” the inventory, how weeks of supply and safety stock are determined, why it is crucial to judiciously utilize open to buy dollars.
Inventory planners should understand the statistical factors and variables producing the forecast, while aware of variances, risks and accuracy levels. An understanding of the meanings behind the metrics helps them to value the implications of their actions on the bigger operational and financial picture.
Successful planners have the ability to think globally and strategically, with a perspective of the business beyond the SKU level. They understand the aggregate inventory positioning as it relates to the in-stock, open-to-buy and turn objectives. They are aware of the organizations’ business strategy and how their decisions can impact the overall success and profitability of the organization.
Good inventory planning requires direct and timely communication of relevant issues to all appropriate stakeholders. This includes knowing when to use a phone call or personal contact, rather then solely relying on e-mail. It is a small, connected world today, and there should be no reason for uncertainty or surprises along the supply chain highway.
Great planners also have the ability to extrapolate meaningful insight from large volumes of data, summarize it and communicate findings in a concise way. It is an art to be able to translate data into actionable information and drive positive results.
Planners should treat their area of responsibility as if it were their own business or store. This level of focus requires the diligence and pride to do what is necessary to effectively manage the “shop.”
The reality is that there are real people (customers) and physical product behind each number on a spreadsheet. Satisfying those customers will ultimately determine the planner’s success and contribute to the profitability of the business. Planners should be engaged and accountable for achievement of their assigned strategic goals and results.
Not everyone can sit in front of a computer for eight hours a day, concentrating on numbers and spreadsheets. Planners must have the discipline and the ability to focus on a range of various SKU level details.
The most important aspect of being in or out of stock is the accuracy of the individual SKU level plan/forecast. The top-level plans/forecasts are important, but the SKU level inventory position ultimately determines the customer fulfillment and inventory related expenses.
In addition to being able to focus on the important details, the planner must also maintain a practical perspective and not get buried in the minutia of voluminous data. There is almost no limit to the amount of data available so it is important that priorities be set and a method of identifying outliers/exceptions be identified.
The 80/20 rule applies to SKU management, as generally 80% of the sales volume is generated by 20% of the SKUs. The planner must prioritize his or her workload to first address the critical 20% of the SKUs that have the greatest impact on the business. Since planners are responsible for numerous SKUs, prioritization skills and the use of exception reporting is critical.
A planner should have a pragmatic approach to decision making, using system recommendations and qualitative analysis to evaluate risk/reward scenarios and make the appropriate decisions that are aligned with the strategic goals.
System-generated recommendations should also be evaluated for reasonableness to avoid unintended output. Planners need to be able to approach problems and data objectively and form conclusions despite ambiguous information.
Challenges and roadblocks are part of any job, so the planner must have the initiative and diligence to persistently manage through issues to resolution. Planners need to build collaborative relationships with business partners to coordinate operational process and to help resolve issues.
The best planners are really facilitators of the supply chain, taking on the responsibility of seeing that every step of the supply chain is executed efficiently to ensure timely in-stock. They have the persistence to follow through and not accept “no” for an answer when hitting roadblocks within the supply chain.
Proactive/sense of urgency
A strong planner is proactive in identifying opportunities and risks to the business, using the appropriate level of urgency to address critical issues. Being proactive to developing business trends and urgently resolving problems can make the difference between positive results or mediocrity.
The planner’s early identification of fast or slow sellers allows for actions to maximize revenue opportunities or mitigate expenses. Addressing opportunities and issues with a sense of urgency can generate revenue and control expenses across the organization.
The most successful people in any job have a positive attitude and a desire to continually learn and contribute excellence in the job’s execution. They have an enthusiasm for the challenges and they work passionately to meet or exceed their assigned goals.
The best employees do not accept the status quo, always looking for innovative ways to enhance processes and improve results. Without a positive attitude, workers won’t make the most of the prior skills, and your investment of time and training will be underutilized.
Paul Angelos (email@example.com) has 25 years of inventory control and supply chain experience and specializes in developing retail planning processes, systems and people.