What is SKULogi - Smart Inventory Planner and How can it Help Your Business Grow Faster?
If you are an e-commerce or retail seller who would like to increase your profits and grow your business faster, SKULogi might be something of interest to you. But before I explain what the Smart Inventory Planner is in detail, allow me to briefly share my motivation behind creating SKUlogi.
Short Background and Motivation
I have more than 14 years of experience in developing, designing and implementing Enterprise Supply Chain software for some of the largest companies in the world. When I started as a software developer several years ago it was by chance that I got into the Supply Chain domain. But I soon fell in love with the field and it became my passion. The thrill of solving real-world problems on a day to day basis, of knowing that a software feature you developed is helping save millions of dollars in revenue annually is something else. Plus, in Supply Chain when you save money by optimizing a process it also means lesser resources are utilized, meaning lesser emissions, lesser pollution. This too was a real feel-good factor which made the job all the more satisfactory.
This passion of mine also led me to take up various courses in Supply Chain and Data Science from the best universities in the world to further expand my knowledge. Not long after I wanted to implement this knowledge to create solutions to help small businesses. This had remained only a wish for some years now, but the recent pandemic and subsequent events have finally pushed me into action.
For years now behemoths like Amazon are using data and Artificial Intelligence to gain every possible edge over their competitors small and big, eventually eliminating them and creating monopolies. At this stage, it would be foolish to even think of matching and competing with their likes, but surely small businesses could take a leaf out of their books and explore the use of data science and AI to help their business. Equipped with the right tool and the support of their loyal customer’s small businesses can hope to expand their sales, increase profit margins, and thrive despite external competitions.
This is the reason I started SKULogi, to create that tool to help small businesses. The idea is to democratize AI and Enterprise-grade solutions for small businesses. The goal is to shave off a little bit of cost, add a few more sales and try and save a lot of time for business owners so that they can focus more on growing their businesses. If I could achieve these for users of SKUlogi I would consider this venture successful.
So what exactly is a Smart Inventory Planner?
Smart Inventory Planner is a SaaS app built to help small e-commerce and retail businesses manage and optimize their inventory and operations better. That’s a lot of jargon. What does that actually mean? Well, the main idea is to create accurate forecasts using past data and use it to plan inventory better. That is, to reduce unwanted costs in products that won’t sell a lot and maximize profits by stocking high selling products sufficiently. Additionally with historical data identify buying behaviors, preferences, things that sell together, areas to focus, products that need quality improvement, and so on and use these insights to improve your business and grow further. It achieves this by using the power of Artificial Intelligence and Machine Learning on existing business data. SKULogi aims to provide value in the following key areas :
Forecasting is something we all do in every walk of life but perhaps without realizing it. Be it deciding which dress to wear for a date or how much beer to stock ahead of a party, whenever we make a decision we are basically forecasting the outcomes of all possible decisions and then choosing the option which we believe would be the most favorable. Our intuitions are useful for these day-to-day decisions, in fact, they serve us quite well as these are formed by our brains based on past experiences and learnings. But when it comes to certain business decisions our intuitions might not be the best tool. Of course, intuitions are still quite essential in macro level decisions and strategies, but our brains are not meant to process thousands and thousands of transactional data and infer the best combination of articles to produce to maximize profits. This is where software comes to the rescue. By combining smart algorithms with time tested statistical models we can generate rather meaningful forecasts. These forecasts combined with the human experience (“intuitions”) could be used to make informed and smart decisions that can affect the business positively. In addition to all the standard statistical models, Smart Inventory Planner uses advanced Machine Learning based probabilistic forecasting. The algorithms automatically identify the right model to base forecast for a product and also considers any other factors that can influence its sales. Not just that, it frequently tests its past predictions against actual demands, this way it learns and keeps getting better as you use it.
All this combined gives you the best reliable forecast on which you can base your inventory and business planning. But despite the clear benefits, most small businesses don’t use any kind of software for demand forecasting. They often rely on their experience which does reasonably well but misses out on key insights that could provide the edge to grow faster and further.
Dynamic Product Classification
It surely would be great to know the projected forecasts for each of the products you sell, but this alone won’t be enough to make impactful decisions, especially when you have a large number of articles. You would need to classify the products into categories and the ABC classification is a simple method to start with. ABC classification is based on the time tested Pareto principle which suggests that roughly 80% of the revenue is brought in by approximately the top 20% of the articles while the rest of 80% of the articles contributes to merely 20% of the revenue. While the % is just suggestive and would actually vary in each case the overall idea that a select few items pull in the majority of the revenue holds true in most cases. Using this you could classify your products into 3 classes, say A B, and C.In some case you may have complete non-movers which can be classified as D.
But ABC alone could not be a reliable method. For example, there could be articles having heavy seasonality that should only be stocked up during a particular season, also some articles which might get classified as C based on revenues could be critical in driving orders leading to the sale of other high-value articles. Smart Inventory Planner’s Dynamic Classification tackles this by combining the classic ABC Classification with smart business heuristics to categorize products in a truly meaningful way.Equipped with this, businesses can focus their time and energy on the right products and identify any profit sinkers and eliminate them.
Replenishment Suggestions & Purchase Order Creation (Inventory Planning)
Once you have reliable forecasts of your demands and have identified the right set of articles to focus on, the logical next step would be to use these insights to plan your inventory. What you need is an inventory policy, simply put an inventory policy for an article tells how much or the article to order or produce and when or at which frequency. Here again, different articles would have different demands, different selling frequencies, and different lead times taken by suppliers to deliver them. Setting up the right inventory policy for all the articles manually would be quite cumbersome, which is why Smart Inventory Planner automates this. It automatically suggests when an article should be replenished taking into account the demands and expected lead time and other delays. Moreover, with the Smart Purchase Order creator, you can easily convert the replenishment suggestions into purchase orders and share them with your suppliers.
Key Metrics for Actionable Insights
To generate the forecasts, classifications, and suggestions SKULogi’s algorithms have to churn through all the order and inventory data regularly. All these number-crunching produces more golden nuggets of insights beyond the forecasts. Who are your high-value customers? Which products are selling the best? Which products and selling together? What’s the total Inventory Value ? and lots more. Smart Inventory Planner presents all these in a beautiful and easy to grasp dashboard. Equipped with these you can make an informed decisions to fine-tune your business for accelerated growth.
Production Planning (Material and Resource Planning)
Many of the small online sellers are artisans, i.e. they produce their own goods to sell. Be it handmade cosmetics, jewelry, accessories, or other custom made goods. In addition to managing the raw materials inventory, getting the production right is an added challenge for them. SKULogi wishes to help here via the Material and Resource Planning(MRP) Add-on. An MRP software is typically used in large factories and production facilities to plan and execute the production of goods in an efficient and cost-effective manner. But there is no reason why small businesses cannot utilize these principles to plan their production better and reduce wastages, costs, and missed orders.
Smart Inventory Planner’s MRP add-on provides an easy way to create your Bill of Material(BOM). A Bill of Material or BOM is like a recipe for your final product. You list all the ingredients (raw materials), resources (machinery or labor) to produce your goods. Using this the system accurately calculates your costs of goods sold (COGS) that help you set the right prices for your products. Also using the demand forecasts of the finished goods and the lead time for raw materials, it provides you replenishment and production suggestions, making management of raw materials easy.
Where are we now and what next?
The app is now live on Shopify app store. You can try it free for 30 days. I am constantly looking to keep improving the app by adding new features and improving existing ones. I also welcome suggestions and feature requests from you. Feel free to share your thoughts at any time using the chat widget on this site.