Many businesses are so focused on building revenue, their profit suffers as a result. Organisations worth their salt know that selling at all costs doesn’t make good business sense. A more sophisticated way to measure and drive success is ROI (Return On Investment). What is the business cost of selling a line item (or SKU) and does it make commercial sense to invest in it in future? The faster the sale of a SKU and the higher the margin, the more profitable the item is to a business.
One size does not fit all
In order to truly optimise ROI, businesses need to measure product performance across their entire range, at an individual SKU level. By learning more about what’s working and why, organisations can start to optimise SKU productivity and increase ROI across the board. This is where Machine Learning combined with Big Data is invaluable. This power partnership can measure the impact of everything from the weather, to negative reviews to sports team performances on SKU performance. Able to handle massive amounts of information generated across multiple sales channels, smart forecasting tools can marry business statistics with data generated across the internet to learn more about SKU performance and empower planners to make more informed and insightful decisions about inventory levels.
Balancing low inventory with high availability
The most profitable (and sustainable) way to do business is to maximise efficiency and minimise waste. However, the reality is that demand and supply planners are often stuck in the middle of contradictory business functions - Finance trying to keep costs down, Sales pushing to spend more to shift product and Retailers managing space restrictions. If the game plan is less about balancing departmental needs and more about adhering to a high-level strategy, demand and supply planners are in a far less problematic position. And if the strategy moves from selling at volume, to ensuring the volume of held stock has been set to meet the demand of the market - ROI will inevitably go through the roof.
Technology empowering people
Automated systems can take a big part of the battle out of the demand and supply planners’ hands, creating an agnostic and unbiased consensus plan that works in the best interests of the business as a whole. Able to ingest vast amounts of data across hundreds of SKUs, smart systems can consolidate this information and turn it into actionable insights.
With this power at their fingertips, supply and demand planners can confidently advise other departments of SKU business value, according to hard facts and clear strategy.