Overview

Typical workflow around inventory planning involves creating a sales plan (i.e. demand plan) and calculating the inventory (i.e. supply) that is sufficient to fulfill the sales targets. Here is a good overview of the typical end-to-end merchandise planning workflows.

Once you have a Sales Plan in place, you will either be in a Receipt Planning mode or an Inventory Planning mode. Most typically, if you have Purchase Orders already On Order, you will not be able to push them out, cancel or amend them. For this period, which is typically as long as your Lead Time, the suggested approach is to Flow your On Order to Receipts, to get a better projection of what your ending inventory is going to be for the time-frame that you can actually control.

Below is a quick visualization on how to think about the 2 time periods; Receipt Planning and Inventory Planning time periods.

Inventory Planning via Forward Weeks of Supply

For the time period where you have full control over your Inventory and Purchase Orders, the suggested way to calculate Inventory and Receipts is via Forward Weeks of Supply Targets. Most common way to calculate the required inventory for sales targets is using forward weeks of supply targets (FWD WOS). FWD WOS specifies the amount of inventory to carry to fulfill X weeks of demand. Please see this blog post on calculating FWD WOS targets to learn more on how to come up with suitable FWD WOS targets.

To use FWD WOS to calculate ending inventory units, i.e. EOP Units:

  1. Expose FWD WOS as a metric on the planning grid (See Using Views in Merchandise Planning)

  2. Set FWD WOS to output to EOP Units. (See Changing Output Metrics)

  3. Set the value of the target FWD WOS. This will calculate the EOP Units and Receipts Units to fulfill your inventory targets.

Finally, please the video below where this all comes together.

Related Articles

Did this answer your question?