If not managed properly, inventory possesses the ability to cripple a company. In a seasonal business, inventory management can be even more tricky to control effectively, but it’s not impossible. Read on for the scoop on how to manage the inventory in your seasonal business with ease.
Start by analysing historic sales data for the high-peak season in logical categories and increments then use this to predict the sales for the upcoming season. It is essential to also factor in adverse events such as lost shipments, backorders, weather events and other mishaps that may affect planned deliveries. Ensure when you do project your sales that you consider the most likely level of sales rather than the highest level of sales.
Inventory to fulfil sales
Once the sales are projected and planned for, you can then start planning your inventory accordingly. The calculation of inventory you want for each new month must include what you think you’ll require for sales, product displays and safety stock should an adverse event occur or sales far exceed your expectations. It is absolutely essential to consider these values before you order your next load of inventory as too much inventory is just as bad as too little.
When you are planning for your sales, you should also plan any discounts. In doing so, you can ascertain how much inventory you must have on hand which will help you predetermine the markdown percentage you can give while still protecting the bottom line.
Plan for turnaround time
Remember to factor in turnaround time. This is the time between when you place the order for inventory stock to when you receive it in your warehouse. This is especially important if your business and inventory is about perishable items where freshness is important in abiding by regulations and quality. Ensure that you time your shipments to come in when you will need them. It is no good to simply bring inventory in with no regard to what is left in the warehouse as you will end up accumulating and incurring holding costs, decreases the likelihood of being sold for top dollar and thus will ultimately erode the bottom line.
Plan to plan
Even though your pre-season planning is complete and orders are in motion, your work is not done. It is vital to keep assessing and planning all through the season as uncertainties arise. Pre-season planning simply gives you an intelligent ballpark to work from, but for complete and effective control of your inventory in a seasonal business, you need to be planning throughout the season and adjusting to fluctuations in demand from the predicted values. Use your inventory management software to help you in analysing your real-time sales data and ensure orders are correct.
Use tools to assist you
Inventory management is an essential element to get right. It can be made immensely easier to manage inventory accurately and efficiently with a cloud-based inventory management software. Instead of relying on spreadsheets or manually tracking stock, let the inventory management software handle that for you with ease!