The holiday season is a crucial time for retailers and their suppliers. It is the make-it-or-break-it time of year that can determine whether a company ends its year in the black or the red. No retailer wants to get caught short during the holiday season, so there is a tendency to overorder and overstuff shelves with inventory in anticipation of the holiday rush, especially when so many suppliers have excess inventory they would like to move. However, a proper inventory management plan is essential to ensure you have the products your customers want and need without going overboard. Here are some “holiday-themed” inventory best practices to avoid being caught over-inventoried this season.
“Looking forward” to the holidays.
A critical first step in successful inventory management is accurately forecasting demand. You’ll need to have a good understanding of what products or SKUs your customers are going to want and need during the holiday season. Forecasting can be done in several ways, through data analysis, customer surveys, or market research. Once you have a good understanding of what products are going to be in demand, you can start planning your inventory accordingly.
Another helpful tip is to make sure that the tools you are using for forecasting are as accurate as possible. It’s important to remember that no forecast is ever 100%, as there will always be a degree of unpredictability. To address this, GAINS uses its advanced demand planning and forecasting capabilities, including demand pattern recognition, demand sensing, and machine learning to help automatically detect and respond to unexpected changes. The result is higher forecast accuracy, improved service levels, and reduced expediting costs often associated with the “holiday rush.”
Making a list
The most critical aspect of inventory management is good planning. You will need to clearly understand what products will sell well and which will not. This insight is, of course, more than just historical data. The information from your various internal systems:
- Point-of-Sales (POS) data
- Stock availability
- Sales Demand
- Product returns
- Lead times
As well as outside (or exogenous) data such as:
- Macroeconomic indicators
- Paid third-party information
- Demographic and government data
- E-commerce data
These data types will be critical in deciding how much inventory to order for the holiday rush. It is also essential to keep track of your historical sales and exogenous data to help accurately predict future demand YOY.
Despite improvements in contemporary supply chain management, the nature of global supply networks makes inventory planning more complex and even more critical for success. Companies need to better emphasize the discipline’s value, given the logistical and financial difficulties encountered over the last few years, which seem to be alternating between scarcity and excess, resulting in the dreaded “Bullwhip Effect.” Thankfully, using solutions like GAINS, planners can leverage big data, AI, and machine learning to monitor, anticipate, and quickly make changes to meet rising production and fulfillment demands without overtaxing their workforce.
Checking it twice
In addition to planning for product demand, you also need to plan for other factors that can affect your inventory levels, such as supplier lead times and shipping delays. If you know that your suppliers will be slow in delivering goods during the holiday season, you must order your inventory well in advance to avoid stockouts. The same goes for shipping delays; if you know that shipments will take longer than usual, you will need to adjust your ordering timelines accordingly. It’s a lot to keep tabs on, but it’s more critical than ever.
Inventory managers have an overwhelming amount of data to sort through because of the enormous amount of information collected at every stage of a global supply chain. It becomes essential for supply chain management to evaluate incoming data and use it for inventory optimization. Data management can be an enormous manual task taking up a considerable amount of time. However, leveraging GAINS’ robust AI solutions and automation strategies, inventory managers and planners can manage by exception. They can maintain a watchful eye on their daily operations while preparing for changes in demand due to seasonality or unexpected interruptions without additional labor resources.
Finding out what’s naughty and nice
Although essential, inventory management is a frequently overlooked aspect of supply chain management. However, poor inventory control can impact the entire organization and have an overwhelmingly nasty financial impact. Analyzing vast amounts of data is at the heart of why Artificial Intelligence (AI) was created and is a big part of the reason AI is widely used in modern inventory management systems, including GAINS. The use of AI in the GAINS platform allows users to quickly make changes to keep their supply chain flowing nicely by continually analyzing patterns in your logistics, raw material, and warehouse operations in close to real-time. Using AI applies predictive analytics to identify tomorrow’s trends today, allowing you to look into the future by continually updating your forecasts to reflect the constant change in today’s environment and avoiding unwanted holiday surprises.
Sending Seasons Greetings
Communication is critical during the planning stages so that every stakeholder involved (e.g., purchasing, sales, operations) are on the same page and working towards the same goal. Trying to manage inventory without a clear plan is like trying to shop for someone on your list who has everything, frustrating and nearly impossible. But don’t limit sharing your “holiday wish list” to only those inside your organization. Long-time GAINS customer Benco Dental frequently shares their GAINS forecasts and other demand data with their suppliers so that each vendor knows what they expect to “find under the tree.” This open communication about expected needs helps Benco Dental and its supplier network to be better prepared in times of increased demand and helps build stronger relationships.
Stuffing the Stock(ing)
Keeping enough stock is essential to meeting customer demand during the holidays. However, you don’t want too much inventory on hand, either. That’s why it’s necessary to balance having enough stock to meet customer demand while not tying up too much capital in inventory. One way to do this is to use just-in-time inventory management techniques. This approach will allow you to order stock only as needed, which will help keep your capital costs down. GAINS customer Stuller practices this technique and uses GAINS to help manage their inventory; they can maintain an inventory that is well balanced for their needs by providing next-day delivery for more than 200,000 products.
The holiday season is an essential time for retailers and their trading partners. Proper planning, forecasting, and inventory management are vital to avoiding stockouts and ensuring enough inventory to meet customer demand. By following the practices outlined above and leveraging the solutions GAINS has to offer, you can rest assured that your business will be prepared for whatever the holiday season throws your way, “naughty or nice.”
Ready to discover how better forecasting and inventory optimization can turn your season from Bah Humbug to a celebration? Let’s talk.