Inventory Control - The Mantra for Successful Marketing Part 1

It has been a while .. So one thing that has touched me to my core in Product management is Inventory control.
To start with i will quote my legendary Managing Director Mr Probir Mukherjee "Orders should wait for goods,goods should not wait for orders"
When i fist heard this i was sitting in my monthly ordering cycle.And this thing touched me to deep.
It is absolutely necessary and important to have goods in inventory but to what extent is the beauty of business.Although it depends on the industry you are in.

In consumer durables i think 90 days is the best time period.Anything above it is a loss and thats what my MD indicates in his statement . While if you take case of beauty products (one of my friend is Buyer for same), they keep inventory for 360 days for many products , reason being the volume gives them cost advantage to very high extent.

I feel the inventory in all cases can be divided in 3 main categories.
A> Sting Inventory
B> Comfort Inventory
C> Killing inventory


A> Sting Inventory : when we start loosing orders for not having goods , this state we not only loose top line but other articles which could had been pushed are also not sold. This is one of the most uncomfortable situations because targets are not met and the market share is lost to competitors.

B> Comfort Inventory : This is the idle and most appropriate state where not only orders are met on time , but also we are able to keep cost of carrying goods in control.Means i am able to meet demand and can also go for expansion as i have buffer of 2 more months.

C> Killing Inventory : Here comes the most dangerous stage.It has many implications
1> These is always a cost attached to the inventory that has been carried
2> There is a very good chance that by the time you sell, the model is
outdated
3> New launches have the effect as old model is already in stock.
4> Price pressure is there. As cost is continuing SKU starts attracting
provisions.

We can go on and on for the same. The extent of damage is different for different industries but there is a considerable damage.

Basically there are few remedies for the same .

1> Proper forecasting
2> Channel strength analysis
3> Product profitability and life cycle analysis.


We can touch on each point in subsequent blogs.

Micro marketing

Marketing in present world is not only very competitive but decisions in present time are taken after considering even the very small or nascent factors . This gave rise to new fundamental called Micro Marketing.
Macromodela descriptive model, designed to communicate, explain or predict some real system or process, in which there is a dependent variable and a relatively small number of independent, determinant variables.
This can be explained well with an example. Say for example i am a company which has 3 major brands and each brand has approximately six products.This gives me the range of 18 different Products.Now if each Product has 3 SKUs i have total reach of 18*3 = 54 .

Now i operate in a region having 5 states and each states have 20 vendors and each vendor or the customer point has its own unique feature.Now i will make plan for each 100 (20*5) touch points . I will fix targets for sales and also analyze the actives for each touch point.

This helps me to monitor and differentiate problems that each sku is facing in each customer touch point.Now i can not only take any action specific to some touch point but also i can analyze the feasibility of each outlet.

So now companies are going towards Micro Marketing where Dependent variable has less independent variables . This leads to greater control in the system.Any control engineer (i am one ) will explain you better.