The lead up to the holiday season is typically a bountiful time for the manufacturing sector. Every year, manufacturers employ casual staff, ramp up production and achieve record sales in the months prior to the holiday season. Manufacturers of consumer goods experience a particularly strong uplift, although the effects typically reverberate through the entire manufacturing sector. The holiday season is a chance for manufacturers to increase revenue, take market share and build brand awareness. For many manufacturers, the holiday season also represents the possibility of a strong end to the second or third financial quarter.
Although the holiday season is a crucial time for many manufacturers, it is also fraught with challenges and risk. Many manufacturers struggle to keep up with peak customer demand while, at the same time, managing high input prices, limited logistics capacity and fragile supply chains. Making the most of the holiday season is essential – other manufacturers in the market are likely to capitalise on peak season, so failing to do so is likely to impede your business’ ability to compete. So, how can your business capitalise on holiday seasonality and keep on top of manufacturing inventory management?
Manufacturing, especially manufacturing inventory management, requires very specific job skills. Finding enough well trained, reliable staff is often difficult for manufacturers at any time, and doing so in the lead up to holiday season is near to impossible. If your manufacturing business has limited staff capacity, you are likely to struggle to contend with the typical pressures that peak season brings. For example, if you are constrained by fixed plant capacity (that is, your factory cannot manufacture enough inventory per hour to meet demand), running a second or third shift may be a relatively simple way to keep up with demand in the short term. Unfortunately, running multiple shifts requires many extra staff and workers are not able to safely work multiple shifts back to back. Without enough staff, your business is likely to struggle to crew extra shifts and meet customer expectations.
Manufacturers who are affected by the holiday season should consider investing in additional staff well before the lead up to holiday season. In a particularly competitive labour market, this may involve recruiting unskilled staff or staff from a related sector and training these new hires to work in the warehouse or on the production line.
Unstable supply chains
If your holiday season is busy, your suppliers are likely to be under even greater pressure. A single supplier may supply many hundreds of manufacturers, many of whom may be ordering greater volumes than usual in the lead up to the holiday season. It is not uncommon for suppliers and service providers to fail to meet usual performance standards during the lead up to the holiday season. Typically reliable suppliers may fail to meet agreed timeframes without explanation. In the worst case, suppliers may fail to deliver altogether.
Although a degree of poor supplier performance may be inevitable during peak season, it is important to avoid very poorly performing suppliers. If your suppliers fail to meet commitments during less busy times, consider trying other suppliers. Manufacturing inventory management software should assist you to identify underperforming suppliers. Ask potential suppliers about their ability to withstand supply shocks and contend with seasonal pressures. Consider selecting transport providers on the same basis as a slightly more expensive logistics provider may be a much better option if the provider can guarantee a given level of capacity even during peak season.
Optimise the inventory manufacturing process
The holiday season is a great stress test exercise. If your business can make it through the holiday season relatively unscathed, it is likely well placed to trade through a range of fluctuating market conditions. Equally, identifying difficulties faced during peak season is a great way to improve your business’ capacity going forward.
Consider drawing a value stream diagram or production map, recording lead times and pressure points at various points during the holiday season. From this exercise, you should be well placed to identify and mitigate potential failure points. Fixing these could involve process changes in areas as diverse as procurement and manufacturing inventory management, production line processes or distribution and marketing.
Since you’ve got a handle on your manufacturing inventory management, read this article to find out how you can source for a great supplier for the holiday season and beyond.
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.