Guide to Creating an Optimal Inventory Management Plan

Guide to Creating an Optimal Inventory Management Plan

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Inventory refers to the materials that serve an organization's needs, both impending and current. Almost all manufacturing, service, and retail sectors hold inventory in some shape or form. This guide to inventory management planning will provide necessary tips and tricks to create an efficient and optimal inventory plan.

Fashion brands and manufacturers will also be able to predict current trends, prevent overstocking and maintain a steady cash flow in the business.

Why is inventory management needed?

Inventory planning and management is necessary to maintain a steady business flow. Proper inventory management directly impacts cash flow, profits, and customer satisfaction for an organization.

A well planned inventory plan is thus key to:

  1. Prevent stock outs at times of peak demand
  2. Prevent extra costs incurred for making last-minute purchases
  3. Leverage bulk orders for discounts regularly from suppliers

Objectives of an optimal inventory management plan

An optimal inventory management plan requires the correct proportion of people, processes, and technology. The objectives of an optimal inventory management plan are:

Inventory Estimation

A systematic plan based upon marketing strategy that helps predict sales. This, in turn, helps in inventory control and maintaining optimal levels.

Cost Control

The goal of inventory planning is to reduce costs incurred due to storage, labor, taxes, and retrieval of items.

Storage Efficiency

A well-placed inventory management plan ensures the arrangement of high-demand items to prevent prolonged travel times. Well-organized storage facilities can achieve this.

Creating an optimal inventory management plan

For optimal inventory management, the following steps are to be executed in cyclical order. This helps to maintain a stable flow of cash and stock for any organization:

Purchasing Stock

This involves buying stock based on market research. Adequate research is needed to understand the market demand. Although excess inventory is undesirable, new organizations may overstock supplies depending on their market research and strategy.

Maintaining an adequate storage facility 

Investing in warehouses or storage facilities incurs recurring costs such as lighting, refrigeration, and convenient retrieval during times of need. Adequate planning is necessary to prevent undue costs.

Retrieval and usage of inventory from storage 

Organizations require retrieved inventory to make use of them, such as raw materials for manufacture or finished items ready to be sold.

Resource tracking

Keeping track of stock is essential to maintain the flow of operations in the organization. Knowing the inventory status allows planning to maintain the flow of production, sales, cash and customer satisfaction.

Reordering stock to maintain optimal reserve of inventory

Reordering may be a manual or an automatic process. Mathematical models are helpful in this regard to maintain optimal stock, record periodic inventory status and replenish them at a consistent frequency.

Be it an experienced organization or a newly-formed one, making correct forecasts of demand and supply will result in maintaining optimal levels of stocks all year round.

Using inventory management software

Using inventory management software to analyze the current market trends can help make accurate predictions. This can be achieved by using digital marketing software that utilizes well designed mathematical models to make such predictions.

Teamwork and coordination

Although the role of inventory management software is indispensable in current times, a well-coordinated team goes a long way in a thriving business. Thus, hiring the right people in the inventory management team to coordinate with suppliers, financial analysts, purchasing managers, and storekeepers is necessary to maintain optimal levels of inventory all year round. 

Company policy

Implementing the right policies and processes for an organization is instrumental in inventory management planning. This helps in the orderly maintenance of stock picking and handling.

Resource planning

The use of enterprise resource planning softwares to implement policies can help maintain optimal inventory levels as per current market trends and financial situations.

Proper documentation and communication

The role of documentation and distribution of inventory records are vital in this regard.

This helps maintain and communicate the company policies within and outside the organization. Maintaining transparent lines of communication within and outside the organization is necessary to ensure the proper process is being followed at all stages of inventory planning.

Challenges in implementing inventory management plans

Inventory management plans can be quite challenging. One of the reasons behind this is the fluctuations in the market caused due to gaps in demand and supply. Although a well-implemented inventory management plan could be useful, the human and the digital elements are not free from their own flaws. 

Inventory management and its implementation require time, money and effort. Sudden changes in policy due to delayed returns, the leaving of trained and experienced staff as well as overdependence on automation and technology could prove detrimental to even the most well-planned inventory management protocols.


Inventory management is a crucial aspect of running a successful business model. Businesses need to forecast the demand and harness their supply chain in a suitable manner. This will ensure that there is always an adequate stock of materials and timely retrieval of the same in order to prevent expensive last minute procurements. Although not without its flaws and drawbacks, an ideal inventory plan will ensure a steady cash flow in a business.

At Fashinza you will find all the resources necessary to source materials for your fashion brand and maintain optimal inventory. Check out how Fashinza can help you simplify your inventory management today.


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