Global inventory carrying costs are estimated at around $1.1 trillion annually, with 22% of total supply chain costs attributed directly to excess inventory. That’s over a trillion dollars tied up in inventory that may not be turning into profit.
In a world increasingly driven by demand volatility, ever-shortening product lifecycles, and geopolitical shocks, holding onto excess stock isn't just expensive — it's a strategic risk. It’s no wonder supply chain leaders face unprecedented pressure to strike the perfect balance between product availability and cost control.
Inventory planning — the process of determining the optimal quantity and timing of inventory to meet customer demand — is no longer a tactical activity but a strategic imperative.
In this blog, we’ll explore what inventory planning is, why it matters, and how modern inventory planning solutions help supply chain teams transform their approach from reactive to proactive.
What is inventory planning?
Inventory planning is not a one-size-fits-all approach. At its core, inventory planning is the science of ensuring the right products are in the right place, at the right time, and in the right quantities. It’s about balancing customer-service-level expectations with the cost of serving those customers.
Effective inventory planning involves:
- Forecasting demand to predict future sales patterns
- Categorizing SKUs to manage inventory levels and segmenting by item, location, customer behavior, and demand variability
- Setting safety stock levels to buffer against uncertainty
- Replenishing inventory across distribution centers, warehouses, and retail locations
- Aligning inventory strategy with business goals, sales trends, and seasonal shifts
Why does inventory planning matter?
A well-executed inventory planning process provides a host of business benefits:
- Total shareholder return – Reduction in inventory is one of the few supply chain activities that has both a one-time impact on the balance sheet as well as a recurring benefit on the income statement.
- Improved service levels – Fewer stockouts mean higher fill rates and better customer satisfaction.
- Lower carrying costs – Avoiding excess inventory reduces storage costs and obsolescence.
- Better working capital utilization – Minimizing overstock and investing in high-performing SKUs helps free up capital.
- Increased visibility and responsiveness – Real-time data enables agile decision-making when demand or supply conditions shift.
In a world of fluctuating consumer behavior and fragile global supply chains, strategic inventory planning is not optional — it’s essential.
Best practices for inventory planning precision
If you’re a supply chain leader looking to strengthen your inventory strategy, consider these best practices:
1. Connect planning across functions
Inventory planning shouldn’t happen in a silo. Collaborate across demand planning, supply planning, finance, and sales to ensure alignment between what’s forecasted, what’s feasible, and what’s financially responsible.
2. Leverage granular data
Move beyond top-line forecasts. Segment inventory by product, location, customer, and time horizon to make more informed decisions. The more granular your data, the more precise your planning.
3. Embrace scenario planning
“Set-it-and-forget-it” planning no longer works. Build “what-if” scenarios to assess the impact of supplier disruptions, demand spikes, or lead-time changes. This prepares your team to act quickly under pressure.
4. Use a dynamic planning platform
Traditional spreadsheets and disconnected, legacy systems are too slow and error-prone for modern inventory planning. A connected planning platform with real-time data, built-in collaboration, and intelligent automation is key.
How Anaplan helps you master inventory planning
Anaplan’s Inventory Planning application empowers supply chain teams to make smarter, faster inventory decisions with confidence.
Key features include:
- Multistage inventory optimization to manage inventory across complex networks
- Real-time collaboration across departments to break down silos and speed up planning cycles
- Integrated demand and supply planning that links inventory decisions to broader business strategies
- Scenario modeling to assess trade-offs and prepare for disruptions
- Automated workflows and alerts to support proactive management
The result? Increased service levels, lower costs, greater agility, and less risk.
Ready to transform your inventory planning strategy?
Our inventory planning solutions bring together data, people, and processes on a single platform, enabling real-time collaboration and smarter decision-making. Whether you’re just getting started or looking to modernize your existing process, Anaplan provides the flexibility and intelligence to drive measurable results.
