Carry Less, Make More with Integrated Demand Planning

Companies that have taken to the omnichannel world are not as tuned in when it comes to integrated demand planning. But they’re getting better.

According to Boston Retail Partners’ 2016 Merchandise Planning Survey of 500 North American companies, retailers admit they are not as effective in managing and planning their inventory for the omnichannel environment as they can be.

To begin with, 71% of these companies reported they do not have formal omnichannel demand planning processes, and 38% continue to segment their brick-and-mortar inventory from their online inventory, in two silos that require independent planning processes.

The report, however, points to a trend among omnichannel businesses that say they intend to improve their planning processes and have made it a priority to integrate their inventory management processes and make better use of data for integrated demand planning.

Improving analytics is a top priority among 44% of retailers, while 41% of companies plan to upgrade their omnichannel demand planning systems within two years, the study said.

Why is Integrated Demand Planning Important?

Companies that started off in the brick-and-mortar world, then went to online channels, often find themselves carrying double the necessary inventory.

They treat their brick-and-mortar stock separately from their online stock, fulfill orders for those channels independently, and end up carrying the cost of holding stock for too long and buying stock they wouldn’t need if they integrated their inventory management.

When the companies integrate their inventory across their channels, they reduce the overall inventory they need to carry.

Integrating demand planning across channels has a similar effect. The goal of demand planning is to move toward perfect order fulfillment with optimal inventory levels. This means being able to make more money with less inventory by bringing down COGS.

Integrated demand planning, in turn, relies on usable data about a company’s inventory. This includes having a full view of sales and stock levels across all channels, and the ability to create usable reports. But that’s just one facet of demand planning.

Read more about the principles of demand planning here.