Improving Inventory Management for Seasonal Changes

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It’s no secret that seasonal inventory management for specialty retailers is not easy. And, to make matters worse, seasonal products are often seen as risky investments. However, the combination of demand and high margins are worth the effort.

Plenty of small businesses have improved their on-shelf availability and reduced overstocking of seasonal products. Wondering how they turned a major problem into a profit-making opportunity? First, they organized their inventory to be easier to manage, then analyzed historical sales data for better-advanced purchasing.

Begin with Organization

For inventory management to be as efficient as possible, it needs to be organized. Most of your products are already separated into segments that reflect the type of product you’re selling and not how the product is sold. For seasonal products, you’ll need to organize them a bit further by placing them into categories:

Life Cycle

Products that are specific to a particular season, such as Christmas decorations, have a short life cycle. Other products experience seasonal peaks but are sold year-round. The shorter the season, the more difficult it is to manage because they require purchasing in advance and have a higher risk for residual stock.

Length of Season

Responsiveness to demand is the key to meeting your customers’ needs. Products that fit into the shorter seasons category require more coordination between you and your vendors, as well as your warehouse. Longer seasons allow for more responsiveness to demands and less advanced buying.

Lead Time

The lead time for seasonal products will dictate when to order and how much. Not all of your products require purchase decisions to be made well in advance of the season, but you do need to know which ones do or else run the risk of not having them on your shelves.

All of your purchasing decisions will be based on these categories. These provide insights into when you should order, whether or not you’ll need special displays, and how to control stock levels at your warehouse. The exact quantities you need to order will depend on your sales data.

Sales Data

Your intuition may be the deciding factor for many of your major business decisions. But, your intuition is not something you should rely on when forecasting sales for seasonal products, because your sales data can tell you a complete story. Plus, newer products may upset demand for last year’s big sellers.

For seasonal favorites, actual sales during peak seasons will determine the quantities you should purchase. What about forecasts for new products? You should consider historical data for the product segment as a good indicator of future sales, and align your purchasing by using the sales categories listed above.

Lead time lets you know how it takes for a product to arrive at your warehouse. Your inventory management systems should set up automated alerts to let you know when it’s time to reorder stock. Now, you have enough time to stock your shelves before the season starts.

Operational Efficiency

When you have multiple stores, a decentralized system leaves room for errors by managers who already feel overwhelmed or are not skilled with forecasting. Whereas, a centralized purchasing and allocation system leads to greater efficiencies and better results. It minimizes inventory risks through a better understanding of stock levels and service management.

The complexity of seasonal products deserves more of your attention. A solid understanding of these control models will help you tackle one of the biggest opportunities for specialty stores.

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2019-10-25T16:32:48+00:00