Min/Max Inventory: Is it really the best way to set your restock levels?

The way most retailers set their buffer stock is by either using a set number of days of stock, or a set number of units. When they hit that figure, their inventory management system will let them know it’s time to restock.

Sounds simple enough. So, why do so many retailers still go out of stock?

Because more often than not, inventory limits set in units can actually set you up to fail.

Are your forecasts all over the place? Are you constantly having to increase your forecasts? Are interruptions with vessels and suppliers causing delays?

When setting minimum and maximum days of stock, most retailers fail to look at one key factor: product predictability.

The predictability of each product you offer is crucial to maintaining optimum inventory levels because it brings stability to both your supply chain and revenue. With a good grasp of your product predictability, you can invest in a smaller buffer and use that capital to grow and expand into other areas of the business.

In short, the more unpredictable your products, the more buffer you’ll need — and the less cash flow and revenue you’ll have at your disposal.

Not sure how to find your product predictability? You can figure out the level of predictability (or in many cases, unpredictability) by looking at two key areas:

• Predictability of sales
• Predictability of supply chain

This will give you a good idea of how easy or difficult it is to align your sales and inventory on a specific SKU. But it’s still only half the story.

Implement risk management strategies to avoid inventory headaches

We hate to say it, but when it comes to inventory there are a lot of sellers who opt for ease over accuracy.

But using inaccurate units, or operating with blanket min/max stock days across your portfolio, can quickly leave you over- or understocked.

The takeaway? Always measure in days, monitor product predictability, and tailor inventory levels to each product for greater accuracy and less risk.

No matter what approach you choose, there are still some variables that could affect stock replenishment. Here are a few pointers to remember:

• Keep your supplier’s Minimum Order Quantities (MOQs) in mind as these could affect how much you restock. Always negotiate and be willing to look around for better deals.

• Your cash availability coupled with MOQ requirements can also affect your ability to replenish stock. Ensure you have enough capital to buy upfront or negotiate with your supplier to secure favorable payment terms.

• Check your shipping costs to assess whether it’s worth slightly overstocking to take advantage of freight discounts.

A smarter way to get the best inventory levels for your store

The ideal inventory optimization platform will also act as a central command center to facilitate quick decision making.

With the right system, you make sure your stock data always reflects your products’ actual sales and supply chain predictability — allowing you to make more accurate forecasts. For example, Flieber allows users to change lead times or forecasts and will automatically adjust the results.

To understand your store’s unique inventory demands, you need a tool to help decipher the possible next steps.

This strategic move uses real-time data and scenario analysis predictions to boost your forecast accuracy so you can confidently make better decisions on when to replenish your stock.

Once you’ve got the right sales, inventory and predictability data on your side — it’s time to make better decisions.

But don’t go it alone.

Flieber helps users decide which actions to take next, based on dynamic data that reflects what’s really happening with your sales and inventory. With a little help from machine learning, Flieber provides clear, actionable guidance, so users always know what to do next.

You’ve got the right data and decided on a solid course. Now, it’s action time.

Your inventory optimization solution should step up and help you act with speed and precision by providing a centralized hub to act from. Flieber helps users book the right vessel for their current needs by providing information on the top service types and providers, explaining which would be most suitable and why.

The final task for ultimate inventory optimization is to utilize AI for repetitive tasks, and get all that grunt work off your plate. Your inventory platform should allow you to set parameters to accelerate task completion, free up time and drive down admin costs.

With Flieber, the user decides to act on Flieber’s recommendation (e.g., a vessel suggestion), clicks the associated button and is taken to the chosen freight forwarder’s portal. Automations then kick in to book the slot based on pre-set rules. Simple.

Keep your inventory levels sharp year-round

As the ecommerce landscape becomes more complex and competitive, how you optimize your inventory levels matters.

Getting a firm grip on stock levels will give your business (and your supply chain) a big boost in efficiency — leaving you free to take on more opportunities.

But to get your inventory levels up to scratch, you’ll need to let go of manual stock management and static stock limits and reach for real inventory optimization.

That’s where the right system makes all the difference.

With an all-in-one inventory optimization tool, you get clarity, peace of mind, and full supply chain visibility so that you can scale without limits.