Seasonal Challenges to Stock and Inventory
Seasonal inventory is stock which is in high demand during particular times of the year, such as during Christmas or Halloween. These periods of time often coincide with the different seasons, and managers need to be proactive in preparing for the waxing and waning of demand during these key times.
In this article, we outline what seasonal inventory may look like and how best to approach it from the supply side of things. This article also assesses some key challenges you may come across when dealing with seasonal inventory, and provides some tips on how you might overcome these issues.
Examples of Seasonal Inventory
Holidays such as Christmas, Easter and Thanksgiving are big drivers of seasonal inventory in America. This means that supermarkets, for example, will see an increased demand during these times for specific products, especially items such as turkey, Christmas decorations and Easter eggs. Halloween is another driver of seasonal inventory, retailers often increasing supply of costumes, decorations and other relevant products.
Likewise, the weeks building up to the start of school terms are another period during the year where demand for specific products will increase, and in response supply will typically increase as well. During such times, retailers can expect to increase the supply of school stationery items, for example, as well as technology like laptops and software.
The Challenges to Inventory Control
A surge in demand for such products has obvious benefits for retailers specialising in these items, such as increased sales and moreover, increased profitability. However, the sudden influx of demand is usually accompanied by a drastically reduced demand soon after. This can be a difficult thing to judge in terms of inventory control, as businesses need to order just the right amount of inventory to meet demand.
In this situation, businesses want to have just enough inventory to meet demand, but this can be a difficult task to achieve. Seasonal inventory may result in over-ordering of stock, and if supply drops sooner than expected, you may be left with an excess amount of stock. For this reason, while seasonal inventory can be an excellent time for increasing sales, it can also pose a real challenge to your inventory control processes.
Relatedly, seasonal inventory means increased costs to your business, since you will often have to stock up on the inventory well in advance of the surge in demand. This means investing a lot of capital in inventory, so you must ensure you have enough cash on hand to tide you over until the sales begin to increase when the time arrives.
Seasonal inventory can be unpredictable, even though you may be able to predict a general surge and decrease in demand. While you may be able to predict that demand will increase during Christmas, for example, it may be difficult to predict exactly when demand will begin to wax and wane. For this reason, seasonal inventory can pose a challenge to your inventory control plan, making it difficult to prepare adequately for the changes in demand.
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.