What do you do if consumer behavior changes and you need to plan future inventory?

Technological advancement is occurring at a rapid pace, and changes in consumer behaviour are concomitant with it. A large inventory of RM and FG could pile up if the company suddenly introduces a new product. To avoid this situation, the inventory planners or managers must work closely with those who conduct market research. If the company decides to introduce a new product, then the inventory managers need to research the market to identify the potential vendors. Information may be obtained about their reputation, consistency, etc. In summary, it can be said that the introduction of a new product should not cause a loss to the organisation because of the accumulation of the inventory.

Assess the Changing Trends: Gather Data: Dig into your sales data, customer feedback, and market research to pinpoint the specific changes. Are there new product preferences? Are certain items losing popularity? Understanding these patterns is crucial for accurate forecasting. Consider External Factors: Look beyond your internal data. Are there external factors influencing consumer behavior, like economic trends, social media hype, or seasonal variations?

Changing consumer Behaviour will be visible in sales. This will in turn reflect in the demand forecasts generated. Planning for future inventory should consume this updated forecast and select the right SKUs. The order to the Suppliers (FG or Raw materials) should be based on this. To ensure minimal TAT to react to behaviour changes, planning should be bi-weekly or daily preferably. The obsolete inventory should be moved to a geography where it will sell, or sell it of in the current geography at a discount.

Update Your Forecasts: Revise Predictions: Based on the new trends you identified, revise your demand forecasts for future sales. Don't rely solely on historical data, as it might not reflect the current consumer behavior. Scenario Planning: Consider creating multiple forecasts based on different possibilities. This helps you prepare for various future scenarios depending on how strongly the trend takes hold.

Increase Flexibility: Shift towards more flexible inventory management practices. This could involve: Shorter Lead Times: Work with suppliers to reduce lead times for obtaining inventory, allowing you to react quicker to demand changes. Smaller Order Quantities: Order smaller batches of inventory more frequently to minimize the risk of getting stuck with excess stock of unpopular items. Demand Shaping Strategies: Explore strategies like promotions or product bundling to influence customer demand and steer them towards less popular items.

Embrace Technology: Utilize inventory management software with advanced forecasting features and real-time data analysis capabilities. This can help you identify trends faster and adjust your inventory levels accordingly.

Maintain a positive attitude: Even in frustrating situations, remaining calm and professional will go a long way in keeping the customer satisfied. Empower your staff: Train your staff on how to handle customer disputes regarding inventory. Equip them with the knowledge and resources to investigate and resolve issues effectively.