Inventory optimization, like most problem solutions, requires a careful process and several steps. Naturally, the easiest way to avoid pending orders is to always have plenty of stock available. There are branches to avoid otimizing the rapier, however. If you produce too much and maintain high levels of stock, the products can be destroyed or even deteriorate. The excess of stock does not only create costs today, but also generates hidden costs later, it is necessary to produce more stores to replace products that have been out of stock for a long time.

There are different ways to calculate your otimization, which we will explain below, but there are three main stages of inventory optimization: discuss the factors that affect the inventory, collect your data and analyze them. Before we go through each stage, we are going to cover some basics about pending orders.

Or what is a backorder that causes?

Simplifying, a pending order means that a product cannot be attended to or delivered because it is not in stock. This may happen because product demand is higher than expected or stock levels were too low to meet current demand.

Pending orders are ruined for your business?

In a word, sim. We are all customers and we don't know when a product or service we want is not available. This does not only prejudice the current customer experience, but also has long-term implications for your brand and non-customer relationships.

So... how do you reduce pending orders?

Three steps to avoid a late order

Stage 1: Brainstorm two factors that affect pending orders, including rapier levels.

The biggest factor in preventing backorders is the level of stock available. If you do not have enough products in stock, you will have pending orders. But the stock available is just a factor. You also need to be aware of all the things that affect a supply chain in movement, such as inventory in transit, forecast of sales, historical performance of sales and the impact of your own suppliers.

So, how do you keep your stock levels high or enough to meet customer demand, lower or enough to not keep stock in excess? You need to think about our factors that affect your rapier levels. Or using structured troubleshooting tools, such as CT Trees or Fishbone diagrams, you can prepare for the event.

Step 2: Collect your dice

After establishing the critical factors that affect the pending orders, you will want to collect data on them. Please note that by collecting your inventory data, you may need to check various sources and systems, and the process of requesting and preparing your data may take longer. Consider how many dice you need to collect.

For example, going back 5 years is probably too much, given all the changes that will occur during that period. Some months of data may be more detailed, so use your intelligence to capture a snapshot representative of your process. You can hire your IT department to help you leverage a powerful data consolidation tool, such as Minitab Connect, to access, integrate, and prepare your data for analysis. 

Step 3: Analyze your data using predictive analysis

Once your dice have been collected, it's time for the fun part: let's analyze it! As analyzes and visualizations of traditional businesses we can place here because the most useful visual is this: the smaller the stock available, the larger the order on hold! As we already know, what we really try to identify is the following: is there another critical factor that stands out as one of the two main drivers of two orders in waiting? Is there an ideal stock level that can minimize pending orders, without excess stock and overproduction?

So, why predictive analysis? In basic terms, imagine creating an equation with all the factors that influence pending orders as predictors and pending orders as responses. Just as in middle school algebra, these are different factors with different weights and, in turn, different levels of influence and results. Here at Minitab, we develop solutions specifically to help you solve these problems!

SOURCE: Minitab Blog

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