Want more revenue without increasing costs?
There’s an incredibly simple way to boost revenue that most businesses never think about. And when you do it right, it fixes your inventory levels, reduces waste, and captures every sale your business has the potential to make.
It’s called demand planning.
The best part? It…
- Doesn’t require a larger budget
- Works with data you already have
- Shows results almost immediately
Let’s dig in…
What you’ll learn:
- Why Poor Demand Planning Is Costing You Sales
- The Revenue Killer Nobody Talks About
- How Inventory Management Software Stops The Problems
- 4 Ways Better Demand Planning Increases Revenue Without Raising Costs
Why Poor Demand Planning Is Costing You Sales
Most businesses don’t realise one thing…
Bad demand planning doesn’t just create cluttered warehouses. It actively loses you revenue. Here’s how:
- Products go out of stock when people want to buy them
- Cash is tied up in slow-moving products nobody wants to buy
Both of these are bad for revenue.
IHL Group research discovered inventory distortion caused by stockouts and overstock costs retailers worldwide $1.77 trillion in lost sales annually. Let’s just take a second to let that sink in. $1.77 trillion!
And that’s not even the worst part. When someone shows up ready to buy your product, and it isn’t there 69% of them will buy from your competitor instead. Do you consider that a lost sale? Nope. That’s a lost customer.
Using inventory management software with robust S&OP software helps teams ensure stock levels align with demand so products are available when the customer wants them. Now you’re getting somewhere.
The Revenue Killer Nobody Talks About
Everyone knows you need to maximise your marketing spend and optimise conversion rates. But nobody’s talking about the silent revenue killer hiding in your warehouse.
Excess inventory.
The average company stocks thousands of dollars more than they need to meet customer demand. Cash. Sitting. There.
And while that money is sitting there doing nothing…
Products that customers want are going out of stock.
It’s lost sales on two fronts. Money being tied up in useless products and sales that are going to the competition because you can’t keep your best sellers in stock. And this, right here, is why demand planning is so crucial.
Ok. Yes. It’s obvious that stocking things customers want to buy is important.
But do you know how many businesses are sitting there with Excel spreadsheets and chucking a sofa cushion at their desk hoping for the best?
Businesses that should be using demand forecasting tools powered by machine learning are missing out on a 30% increase in forecast accuracy. That’s according to McKinsey & Company.
Manual forecasting coming in at… You guessed it. 60% accurate.
If you have no idea what those numbers mean… Companies that fail to use machine learning for demand planning miss out on 30% more sales opportunities.
How Inventory Management Software Stops The Problems
Enough of the doom and gloom. Let’s talk about the solution.
Inventory management software packages eliminate guesswork from your demand planning strategy. Instead of throwing your hands up and hoping for the best these solutions take historical sales data, current market trends, and more into account when predicting what your customers are going to buy and when they will buy it.
Here’s what THAT could mean for your business.
- Stock exactly what customers will purchase
- Keep less excess inventory that ties up your cash flow
- Stop stockouts that send your customers running to the competition
- Free up working capital to invest in growing your business
That’s why the inventory management software market size is projected to reach $7.14 billion by 2033. Businesses are finally waking up to how important accurate demand planning is to their bottom line.
Companies who use demand planning tools can reduce inventory levels by 10-15% while maintaining (or increasing) customer service levels.
And there you have it. Less money spent on inventory. Less inventory not selling. More revenue. No increased spend.
4 Ways Better Demand Planning Increases Revenue Without Raising Costs
Let’s take a look at a few examples of how better demand planning can lead to more revenue without increasing costs.
Decrease Stockouts To Increase Sales
Think about every single time a product goes out of stock. Every. Single. Time.
That’s a sale you didn’t make.
And according to research mentioned above, most customers won’t come back looking for you when your product is restocked. They’ll simply buy from your competitor.
Avoiding stockouts isn’t just nice to have when demand planning. It’s essential. And when you get it right, sales will start to increase almost immediately.
Reduce Excess Inventory To Free Up Working Capital
When you have a better handle on demand planning you won’t order more than you need to. Which means less cash sitting in your inventory payments until a product sells.
Think of it like this…
Every dollar you have stuck in inventory that isn’t selling is a dollar you can’t spend feeding other areas of your business. Whether that be marketing, product development, or expansion.
The less money tied up in unsold inventory you have, the more you can invest in growing your revenue.
Build Better Supplier Relationships
One of the many benefits of accurate demand planning is your orders become more predictable. Predictability your suppliers will love.
Why?
When your orders are consistent your suppliers will reward you with things like:
- Better pricing
- Fewer rush orders
- Smaller lead times
All of which leads to lower costs and better margins.
Make Informed Business Decisions
Nothing makes an entrepreneur feel more powerful than making informed business decisions. Decisions like:
- Should we buy seasonal products earlier this year?
- Are our promotions hitting the mark?
- When can we expect to launch that new product?
Questions like this are answered by looking at your demand forecasting reports. There’s no more guessing when your demand planning is backed by solid data.
Wrapping This Baby Up
Better demand planning is a secret weapon your competitors are probably not using. At least not to its full potential.
Every business could see a bump in revenue by simply implementing a cloud-based inventory management system with built-in demand planning and forecasting capabilities. It’ll drive down expenses by reducing excess stock and lost sales.
To keep this as simple as possible.
- Poor demand planning costs your business money
- Stockouts lose you customers
- Inventory management software powered by AI eradicates guesswork
- Accurate demand planning keeps more money in your pocket
- More money in your pocket = more money to grow your revenue
Businesses that take demand planning seriously are the ones that will thrive. Businesses that don’t…? They’ll continue leaving money on the table.
