Last year, I wanted to be a grateful child and buy a sweater for my mom. It was Mother’s Day, so I logged on to one of the prevalent e-commerce sites.
I browsed and eventually found several sweaters in lilac, my mother’s favorite color. To my delight, I found one that was on promotion. I was excited to place the order immediately so my present would arrive in time for Mother’s day. However, I was shocked that my mom’s size was out of stock.
This got me thinking, “What is the purpose of having a Mother’s Day promotion if people like me can’t find the right size for their moms? What did the company do insufficiently? Is there a way they can improve availability during these special day promotions so shoppers like me are not disappointed?”
The answer lies in promotion management.
What is Promotion Management?
Promotion Management is optimizing the utilization of tools, strategies, and resources to promote a product that will generate additional demand. To achieve this, you identify your potential customers, decide your promotion budget, and select your product to promote.
Let’s face it, who doesn’t like discounts or promotions on products they want to buy? I most certainly do. From a seller’s point of view, selling additional units and earning the goodwill of customers is always beneficial. So, optimizing the promotion process leaves everyone involved better off.
Why should we consider Promotion Planning in Inventory Management?
Retail companies, whether e-commerce, brick-and-mortar, or both, care about their inventory. Too much stock means unnecessary expenses, and too little translates into lost sales. And as the market gets increasingly competitive, no company is willing to stay a step behind its competitors.
During promotional management, especially for significant events around special days and holidays, inventory levels need to be adjusted to meet the peaks in demand. This requires using advanced analytics to analyze historical demand patterns, link the demand peaks to promotional offers, and adapt future forecasts based on planned promotions.
With the availability of many tools and digital solutions, all this processing and prediction can be easily automated. Promotion-sensitive demand forecasts at the granular level are then used to adjust inventory targets and drive additional replenishment and procurement decisions. When demand forecasting, inventory planning, replenishment, and procurement are done in an integrated fashion, the availability of the individual sizes of products improves, maximizing sales.
Also, business KPIs such as customer satisfaction and sales conversion depend heavily on inventory availability. Therefore, intelligent inventory management benefits the business results and the brand image.
The Solution: Quality Data, Machine Learning & Artificial Intelligence
This is where promotion planning software plays its part. The solution to incorporating promotions while managing inventory lies in data analytics. Machine Learning (ML) and Artificial Intelligence (AI) are two of the most amazing tools the new millennia brought in innovation. Most business problems of the era are solvable because of these two technologies via promotions software.
Use retail promotion analytics to generate past sales data, organize the data, process the data, and generate recommendations and actions. These steps do not happen magically overnight; ML & AI make them possible.
If the company I wanted to order a lilac sweater for my mom considered the importance of keeping an optimized inventory considering their promotion, my sole reason for writing this blog would not exist. If they had thoroughly planned inventory and analyzed past Mother’s Day patterns to project demand, they would have anticipated the additional demand better.
If they were using tools and solutions for this process and utilized the necessary technologies of ML and AI, they would have never run out of promotional products for their customers, whether they be different colors, sizes, or any other differentiating metric. This is the importance of using inventory planning and optimization software to make inventory management across the supply chain possible.
Companies should comply with modern retail standards and employ the necessary measures to meet ever-challenging customer demands using promotion planning software. Hopefully, I will have better luck finding the perfect present for my mom this Mother’s Day.
Take Your Promotion Planning to the Next Level
The Solvoyo Platform offers state-of-the-art Promotion and Inventory Planning customizable to every company’s unique needs. The platform enables:
- Eliminating Excel-based and error-prone reconciliation of your inventory planning processes
- Harmonizing enterprise data with external data to solidify your tactical demand plan
- Making the most of the new AI/ML technologies with your existing IT investment
- Connecting all of your planning modules to create a unified user experience
Solvoyo is a Gartner-recognized vendor supporting integration with many commercial 3rd-party ERP and homegrown systems. Our Promotion Planning capabilities support our other services that range from Demand and Supply Planning to Store Replenishment.
