As the economic climate remains uncertain, with operational costs rising and consumer demand still unpredictable, more and more businesses are starting to offer bundles and assembly products.
Bundles and assemblies are both types of variants that involve combining so-called ‘child’ components into a singular ‘parent’ component. They offer considerable benefits for merchants, but they can make forecasting demand more complicated.
This blog will explain the advantages and share five top tips for accurately predicting demand and simplifying production, to avoid both excess stock and stockouts and to boost your bottom line.
A bundle, also known as a kit, a virtual bundle or a gift set, is a way of selling multiple variants as a single unit. For instance, five t-shirts that can be sold individually as ‘child’ components can be bundled together as one pack of five t-shirts (a ‘parent’ component).
The benefits of selling bundles include:
- incentivizing customers to purchase multiple products at once
- clearing excess stock (by bundling less-popular products with more popular ones)
- gaining a competitive advantage (by offering unique and value-added packages)
An assembly or assemble-to-order (ATO) product is created by combining multiple individual components or parts together to make (or assemble) a product that is sold as a complete unit.
Nested assembly products are made using other assembly items. For instance, a cookie is itself an assembly item (made using butter, flour and sugar as its components) but is typically sold as part of a nested assembly (eg: a pack of 10 cookies).
The benefits of selling assembly products include:
- Cost savings – it’s often considerably cheaper to leverage economies of scale to buy individual components and assemble them in house
- Bypassing supply issues – if supply of ready-assembled items is unreliable, buying the components and assembling them in house can avoid delays and stockouts (which can dramatically impact cash flow)
- Flexibility – merchants can introduce product variations, or make modifications based on market trends or customer feedback, without relying on external suppliers
Here are five smart tips to forecast demand for assemblies and bundles…
1. Use cutting-edge forecasting software
Because assemblies and bundles consist of multiple components or products, an intelligent, technology-led approach to forecasting is needed so merchants can access real-time visibility into stock levels and so that demand can be accurately predicted for final products, which factors in the availability of components.
With Inventory Planner, it’s easy to create bundles and assemblies so the software understands exactly what is needed to make the item. It can then track the availability and stock levels of each separate component, ensuring that there are sufficient quantities available to fulfill demand for the assembled or bundled final product.
The app provides easy-to-understand buying recommendations for all components so you only buy what you need, when you need it. This ensures you don’t tie up your cash in components that won’t be used and avoid stockouts or excess stock.
2. Get the timing right
When selling bundles and assemblies, timing is everything. The production line can only run smoothly, and stockouts or delays can only be avoided, if all components are in stock as needed.
Inventory planning software is critical for getting the timing right. Inventory Planner takes into account the lead times of each component when creating forecasts and buying recommendations.
This is important because if one component has a lead time of 14 days and another has a lead time of 60 days, you don’t want to order both at the same time because this would tie up cash unnecessarily.
Instead, Inventory Planner looks at demand for the finished assembly and works backwards, factoring in how long it takes to assemble and how long the lead time is for each component.
This also applies to nested assemblies. Going back to the cookie example, if you need flour, sugar and eggs to make cookies, then you need baked cookies to make a 10-pack as the final product. Inventory Planner can cue up ingredients as needed to meet demand for the 10-packs, streamlining the entire process.
3.Pay attention to insights and KPIs
Knowledge is power and with Inventory Planner you get plenty of it – even across bundles and assemblies. Granular-level reporting is available with KPIs that show you how different bundles and assemblies perform compared to one another (and across time periods). This can help you make data-driven decisions on which assemblies and bundles to invest in next.
As well as insights for your bundled and assembled inventory, keep an eye on the insights for your whole range, too. Inventory Planner proactively analyzes your sales and flags up slow-selling and excess stock. These less popular products are ideal for being added to bundles with more popular items, before they become obsolete and have to be discounted or marked as a loss.
4. Follow ‘next to assemble’ recommendations
Production planning is critical for assemblies and bundles, which will help to optimize stock of components and finished goods.
Inventory Planner provides intelligent ‘Next to Assemble’ recommendations to help with this within its replenishment recommendations. This means that as well as seeing the components that need to be ordered, the ‘Next to Assemble’ column shows exactly how many assemblies (final goods for sale) can be made from the components immediately available.
If you’re waiting on a component on an open PO or a subassembly, this column it’ll show the date when the component or subassembly will be ready. This level of detail can make all the difference when you are planning and replenishing.
5. Optimize forecasting with third-party tools
Managing inventory for items that are sold individually as well as in bundles can be complicated.
For instance, if a merchant sells a five-pack of t-shirts as a bundle but also sells the t-shirts individually, an external solution is likely needed to decrease the stock level across both items when a single t-shirt is sold.
Fortunately, there are best-in-class add-on apps that can make this much easier (such as the Bundles App for Shopify users) and it’s easy to connect these to Inventory Planner as your primary forecasting tool.
Book a free demo to discover more about how Inventory Planner can make selling bundles and assemblies simpler and cheaper.