Inventory drawdowns used by scaling retail brands
How scaling brands use inventory drawdowns to determine production quantities, and grow efficiently.
Grow Faster With Sales and Operations Planning
You want to double year-over-year but how do you know how much inventory to keep on hand? These opportunities are rarely certain.
Ian Leaman
Oct 4, 2023
Reposting a blog we did in collaboration with FoodBevy for emerging brands.
Are you struggling to align your sales and production operations planning? We’ve seen a lot of emerging brands struggle with setting and meeting targets within their teams. You have ambitious goals and want to double year-over-year but it’s hard to know how much inventory to keep on hand because these opportunities are rarely certain.
Take advantage of a process being done at the large brands for a long time called the S&OP, or the Sales and Operations Planning process. S&OP is a collaborative effort between sales, marketing, finance, and operations teams to ensure that all departments are working together toward the same goals.
The Weekly Meeting
Weekly meetings between sales and ops can be a very effective tool to make sure you’re on track and can quickly change the plan as new data becomes available.
As your brand grows you may want to add in more layers to the S&OP process but meeting weekly can provide a lightweight framework to discuss the most urgent points.
S&OP typically involves five steps:
S&OP is an important process for businesses of all sizes. It can help to improve efficiency, reduce costs, and increase profits. By ensuring that all roles are working together towards the same goals, S&OP can help to achieve your strategic objectives.
Here are the 5 steps:
- Gather and manage data. Collect information on sales forecasts, inventory levels, production capacity, and financial goals. Review the past week’s plan
- Develop a demand plan. Forecast future demand for products and services (check out this post on creating a demand plan).
- Conduct supply planning. Determine how much product to produce or procure to meet the forecasted demand.
- Reconcile the plans. Compare the demand plan to the supply plan and identify any gaps.
- Approve and release the plans. Document the plan and share it with all relevant people in the company to ensure everyone is working towards the same goal.
You should then regularly compare your actual sales and production against your predicted values to inform your next forecast and identify issues with inventory levels and upcoming events that could affect demand.
How to Execute This Plan
It’s common for sales and operational roles to each develop their own language and targets when working in a silo. Sales may be planning to support a potential retail launch, while operations is worried about too much inventory on hand that’ll expire.
Get sales and operations on the same page by using Pantry AI to have a single source of truth for planning. Sales, operations, marketing, and finance can use this software to make forecasts and align on a plan moving forward.