I am a self-confessed movie junkie. I anxiously await each installment of the Marvel Cinematic Universe; I have the complete extended editions series of the Lord of the Rings and the Hobbit; and I carefully curate selections for movie marathon weekends with friends. While I maintain my preference for physical media, and its better quality of video and audio in my opinion, overall consumer behavior is changing.
Spending on physical products for in-home entertainment, such as DVD and Blu-Ray, fell 16% to $8.85 billion globally. In this declining market, there is an opportunity for home entertainment companies to optimize their supply chain to capitalize on their market share. Vision Inventory Management leverages real-time customer demand data to deliver recommendations and reporting, helping you make data-driven decisions on inventory levels, placement and sales forecasts.
Balancing the Right Amount
Manufacturing and holding the optimum level of inventory is critical when it comes to best practice supply chain management. Too many units may lead to product being dumped in a bargain bin to be sold at deep discounts, or worse- not sold at all. On the flip side, empty space where the item should be is certain to drive customers toward other buying methods.
One side of the balancing act is in the manufacturing stage. It is important that you only produce the number of units you reasonably expect to sell. On-hand distribution inventory should be kept to a minimum and turned over as frequently as possible. The second side is working with your retailers in setting in-store stock levels. The ambition of every sales team is to sell as many units as possible, which may result in a glut of product in the area. A collaborative approach necessary to maximize sales revenue and minimize returns.
Timing is Everything
Accuracy is the second key element. Inventory management solutions use historical data combined with algorithms to forecast demand for any given product at any given time. This area is another that necessitates collaboration between supplier and retailer. Tailor product offerings to the buying habits of the customers in that particular area. Animated family movies are ideal for suburban areas with young families, but probably won’t move well in the urban neighborhoods populated by single professionals.
Historical trends sometimes need context to avoid skewing future results. The deaths of iconic musicians Michael Jackson, Prince, Tom Petty and Aretha Franklin resulted in significant sales spikes for their collected works, although interest will inevitably fade with time. Vision allows for certain exclusions to account for such unexpected events.
Setting the Goals
Once any anomalies have been addressed, it is essential that you examine your forecast accuracy and benchmark forecast to actual sales. According to research by SiriusDecisions, 79% of sales organizations miss their forecast by more than 10%. Forecasting is inexact, and often a lot of guess work is involved. The goal is to minimize that guesswork through the strategies you utilize, as well as the accuracy of the data available.
Unreliable forecasting can be costly. A study by KPMG found that companies with less accurate forecasts saw share prices rise by 34%, while peers with more accuracy saw share prices increase 46%. Forecasting allows you to know where your business is going. Vision Inventory Management uses advanced algorithms and daily forecasting by item and location to provide full demand planning for every point in your supply chain.
Tying It All Together
It is possible to achieve this trifecta of inventory, location and revenue through careful demand planning and inventory management. With Vision and the knowledge of our experienced industry experts, production decisions and inventory levels can be better matched to consumer buying activities. With reliable data that results in more accurate forecasting comes the ability to make better decisions for your organization.