Lessons from the Festive Season: Key Factors Affecting Inventory Management During Seasonal Peaks

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The holiday season is the most lucrative time of the year for consumer spending and with a trend towards online shopping more pressure than ever is being put on fulfilment centres and distribution hubs to meet consumer demands and expectations.

Although different businesses will experience peak demand at different times of the year, many businesses experience a peak during the festive season from Thanksgiving through Christmas to New Year. These seasonal peaks are one of the major recurring factors affecting inventory management. With that in mind, the start of 2019 provides an opportunity for SMEs to consider how they might improve on peak season inventory management during the year to come, especially as consumer expectations of peak season performance require faster delivery and better service than ever before.

Ensuring capacity and flexibility within the fulfilment system

When a distribution or manufacturing hub is being designed it is important to not just build to meet current production but to allow space for variable peaks in demand whether these are from wholesale, retail or eCommerce direct to consumer channels.

Peaks for wholesale orders may occur towards the end of the month while eCommerce may peak multiple times within a shift. Having efficient inventory control by understanding factors affecting inventory management allows for picking and packing to be effectively managed. Cartons coming into a warehouse may go straight to a palletising area rather than onto warehouse shelves for wholesale customers, while eCommerce orders may be prioritised over wholesale if a shipping carrier cut off is approaching.

Inventory management software allows for real-time management of inventory control assets. This software can establish the best method of processing all types of orders and enable shared subsystems such as packing to be most efficiently utilised to meet both retailer and consumer demands.

Systems-based solutions to problems

A warehouse that is built to handle peak capacity is only as good as the software and hardware that is installed in it. Inventory management software and inventory management assets need to be able to handle peak fluctuations and work together with each other. Within the inventory manufacturing flow there only needs to be one failure to grind the whole system to a stop. Data captured from inventory control software needs to be reviewed to identify ongoing issues and address them promptly. This data can also be used for real-time inventory management and to optimise inventory control.

Ensuring inventory flow within the supply chain

In a 2017 Global Online Consumer Report by KPMG about eCommerce trends, 53% of consumers said that enhanced delivery options were one of the most important company attributes when deciding where to buy from. This is driven by the need for instant gratification and the belief that delivery for products takes too long. These demands for delivery need to be reflected within the fulfilment cycle, especially around peak seasons such as Christmas where an order not making it out before Christmas delivery cut off could cost your business loyal customers. A shipping carrier works to prearranged collection times and will normally not wait if the warehouse isn’t ready, this means manufacturers and fulfilment centres need to communicate clear cut off times to consumers to meet delivery timeframes and ensure that the warehousing has the capacity to meet these cutoffs.

Inventory management software enables a range of factors affecting inventory management to be monitored and resources to be allocated to meet changing peak demands, as the report outlines meeting these changing consumer demands is key to building and maintaining a customer base.

Looking back at the highs and the lows

Manufacturers and fulfilment centres need to understand peak demand whether it be festive seasonal or otherwise. Following periods of high demand due to seasonal effects, a business should also reflect upon what went right, what went wrong and why. This allows for the system to be improved prior to the next peak arriving.

Seasonal order peaks will continue to be commonplace within manufacturing and order fulfilment however utilising the above tips will help any business handle the changes in demand and build customer relations.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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