To Build or Buy: The Endless Inventory Planning Dilemma

To Build or Buy: The Endless Inventory Planning Dilemma

Apr 17, 2023
Expert Tips
To Build or Buy: The Endless Inventory Planning Dilemma

In today's highly competitive world of supply chain management, where staying ahead of the curve is crucial to achieving success and profitability, effective inventory planning is absolutely vital. Business owners and managers will make critical decisions when it comes to managing inventory, one of which is: should you build your own system from scratch or buy an existing one? This decision could have a significant impact on your company's efficiency, productivity, and ultimately, your bottom line.

Every business is unique, and the main intent of this blog is to provide essential insights on both options so that you can make a well-informed choice that aligns with your business and goals.

| Basics First: Inventory Planning vs Inventory Management

Often confused with inventory management systems, inventory planning systems are fundamentally different in their purpose and functionality.

An inventory planning system is a sophisticated tool that relies on ML or a heuristic based approach to provide reliable recommendations for Demand, Purchase and Distribution Planning for optimally allocating and planning stock for the right place at the right time. By using this tool, businesses can optimise on its working capital while ensuring visibility around their inventory which eliminates out-of-stocks, thus saving time and improving their fill rates.

On the other hand, inventory management systems track goods throughout the entire supply chain, from procurement to production to final sales and fulfilment. With an inventory management system in place, businesses can monitor inventory levels across its warehouses, and track sales and shipping, among other critical tasks.

These two systems cannot replace one other as they have a complementary relationship, and their combined usage can result in maximum efficiency. An ERP is an example of inventory management systems, whereas Crest is an example of an inventory planning system. To gain a better understanding of this concept, you can read our blog on: Why your ERP is not your Inventory Planning Tool 

| DIY : Concept to Reality

Building your own inventory planning system can be appealing as it provides complete control over the system's features, functionality, and integration with other systems. Moreover, customisation can be done to meet specific business requirements as the company evolves. Although custom solutions require higher initial costs and do not have ongoing fees or upgrades, investing in the development stages is necessary to ensure the system is designed and implemented effectively to support the company's growth.

Nevertheless, building your own inventory planning system can have some potential risks causing  ineffectiveness. One of the significant drawbacks is that the development process can be time-consuming and resource-intensive. This would require a dedicated team of developers to design, build, and test the system, which could take away from the business goals and even delay the implementation. Furthermore, building a system from scratch is no cake walk, as it demands a skilled team with significant expertise in data analysis and supply chain management and lack of this could result in the system not meeting your business needs. 

| Off-the-Shelf : Concept to Reality

Buying an inventory planning system can provide a swift solution without requiring any investment in development resources or expertise. Ideally, it includes support and training resources, enabling businesses to quickly get up to speed. Moreover, businesses can leverage the expertise of the software vendor, as their prior work with numerous other businesses has allowed them to develop best practices and proven methodologies, thereby enhancing the solution's effectiveness.

Moreover, businesses can take advantage of the software vendor's expertise, as their prior work with numerous other businesses has allowed them to develop best practices and proven methodologies, thereby enhancing the solution's effectiveness.


Off-the-shelf solutions can be limiting in terms of customization and may come with subscription costs. However, it's important to note that there are now products available that offer more options for customisation.

| Parameters for Evaluation

In the process of choosing between building or buying an inventory planning system, there are various factors that should be considered. These factors include the size of your business, the specific needs of your organisation, available resources, and budget constraints. 

If your business requires a customised inventory planning system and you have the necessary development expertise and resources, building a tailored solution may be the ideal option. However, it also entails significant risks and investments in terms of time and resources, particularly for businesses with high order volumes and SKUs that require complex software, potentially limiting scalability in the future. On the other hand, scalability is not an issue when purchasing a pre-built software. Alternatively, if you prefer not to assume the risk of building your own system or lack the necessary resources, purchasing an off-the-shelf solution may be a wiser decision given they are proven and reliable solutions and take your business to the next level!

| Conclusion

It's crucial to carefully evaluate both options and determine which one best suits your business's unique requirements. When making your decision, consider the long-term costs and benefits of each option and prioritise the features that are most important to your organisation. 

| Better Inventory Planning in a click

Whether you choose to build or buy, receive expert guidance for your inventory planning. Visit our website or Book a demo to speak with our experts.

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