Each year, companies go through changes upon changes as the months go by. They adjust as demands fluctuate, and over time, they see the patterns and prepare for what trends they know are coming. Of course, these apply to many types of companies, but especially those that deal with an inventory.
The Challenge of Seasonal Inventories
Forecasting is a common issue for companies managing their supply. Even with years of experience, there are inevitably times where sales skyrocket or drop sharply and that will create a blip in the cycle. If they are not careful, companies can end up with too much or not enough inventory.
Experts have said that there are three main elements that allow for proactively ordering in time for seasonal peaks. These are understanding when peaks will happen, the size of those peaks compared to a normal season or period of time, and anticipating a level of uncertainty even with the forecast. Planning for seasonal changes is delicate. The ideal scenario is to maximize product during the times where demand will be high to boost profits. But unfortunately, over or underestimating can lead to a reduction in overall profits. Without the right tools
There are a few keys to being more efficient with seasonal inventory management. Categorizing can be particularly helpful. Sort the inventory by the life cycle of each product, the (anticipated or actual) length of the season, and lead time of purchases.
Life cycles are relatively easy because some products and services are best during specific times of the year. Therefore, when the prime time is over, the product has reached its life cycle until the next year. Length of seasons is key because short seasons need efficient allocation and longer seasons need responsive replenishment. Reducing purchasing lead times can help effectively lower risk of inventory. This is not always controllable, some products just take longer to ship. The further in advance ordering must be done, the more limited you are in adjusting inventory volume as needed.
Finally, utilizing an inventory management tool or software can make seasonal changes easier to track and predict. Many of them have the ability to store data and information that makes forecasting and categorizing simpler. It makes systems work smarter and not harder.