Inventory planning is the process of determining the optimal levels of inventory that a business needs to maintain in order to meet customer demand while minimizing the costs associated with holding and managing inventory. Inventory planning involves forecasting demand, determining order quantities, and establishing inventory policies and procedures to ensure that the business has the right amount of inventory on hand at all times.
The goal of inventory planning is to strike a balance between having enough inventory to meet customer demand, and avoiding excess inventory that can tie up capital, take up valuable storage space, and increase the risk of spoilage or obsolescence. Effective inventory planning requires a thorough understanding of customer demand patterns, lead times for ordering and receiving inventory, and the costs associated with holding and managing inventory.
Inventory planning can be a complex process, especially for businesses that operate in multiple locations or deal with a large number of SKUs. However, by implementing effective inventory planning strategies, businesses can improve their operational efficiency, reduce waste and costs, and improve customer satisfaction by ensuring that the products they need are always in stock.