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Demand & Inventory Planning Meeting Seasonal Demands: An eCommerce Guide to Seasonal InventoryLearn how to navigate seasonal demands on inventory and fulfillment without increasing off-season storage costs or over-extending internal resources at peak season. What Is Seasonal Inventory?Seasonal inventory refers to products that sell at a higher velocity during particular times of year. Most merchants experience an influx in seasonal demand during the holiday season, and many may stock holiday-specific SKUs that they don’t sell year-round. Other merchants may experience seasonal spikes according to changes in weather, sports seasons, or secondary holidays such as Valentine’s Day or Father’s Day. All seasonal demand, whether related to the peak holiday season or not, has traditionally forced merchants to choose between two less than ideal options: either lock into a storage and fulfillment contract that will cover peak capacity and pay for unused storage during their off-season or keep operations tight year-round and over-extend on internal resources during their busy season. However, leveraging on-demand warehousing gives seasonal merchants a much more attractive third option: pay only for the warehouse space and labor they need when they need it, allowing them to scale up operations quickly to meet seasonal demand without committing to using the same amount of resources in the off-season. This new option makes seasonal sales much more profitable for merchants by lowering operating costs year-round. On-demand warehousing is made possible by aggregating the volume of multiple merchants’ to negotiate better storage rates and Service Level Agreements (SLAs) for merchants with seasonal or cyclical demand. Also known as co-warehousing, this sharing of resources is beneficial both to merchants and 3PLs looking for guaranteed order volume. According to McKinsey, when compared to dedicated fulfillment, co-warehousing can save merchants an average of 7-9% on their fulfillment costs. Seasonal Inventory Challenges in 2022This peak season, many merchants are dealing with the “bull-whip effect” of over-ordering inventory during last year’s supply chain shortages, paired with shifts in consumer demand. An influx of inventory in the US supply chain has left many merchants with obsolete inventory taking up valuable warehouse space on warehouse shelves. According to Ware2Go CEO, Steve Denton, there are three simple steps these merchants can take to both lower their peak season fulfillment costs and make room for their incoming seasonal inventory. In the video below, Steve outlines why merchants should be re-allocating their slow-moving inventory, prioritizing demand forecasting, liquidating obsolete inventory ahead of peak season.
Seasonal Demand and ProfitabilitySeasonal demand can often make or break a merchant’s top-line revenue for the year, but it also creates a unique set of logistics and fulfillment challenges that are hard to navigate without negatively impacting the bottom-line. While the rest of the year may be significantly slower, they need the resources in place to meet seasonal demand when it comes. Understanding the effect of year-round fulfillment and storage costs on the margin of seasonal sales will help merchants really leverage seasonal demand to grow their business. The first impact of seasonal demand is a fluctuation in the amount of inventory storage space needed. The graph below shows an example of a merchant whose sales peak during November and December each, driving up their storage needs by more than 100% compared to their off-season in the early summer. If this merchant were to enter into a contract with a traditional 3PL based on their peak season storage needs, they would be paying for more than twice the storage space they needed for most of the rest of the year. If they entered into a contract based on their off-season needs and then tried to find a short-term seasonal contract, they would end up paying a steep premium for peak season storage, and as available warehouse space continues to decline each year, they would run the risk of not being able to find space for their seasonal inventory at all. How to Manage Seasonal Inventory?Seasonal demand is met with a host of other challenges around warehouse space, labor, and evolving customer expectations for ecommerce shipping.
The question remains, in spite of these challenges, how can merchants manage seasonal inventory? The first step is through proactive supply chain planning. On a practical level, a proactive approach to supply chain planning looks like:
There are five main methods for managing inventory, and any of them could be appropriate for managing seasonal inventory, depending on SKU profile, sales velocity, current business operations.
How On-Demand Warehousing Helps Meet Seasonal DemandsWithout the proper warehousing and fulfillment solution, seasonal suppliers may spend a significant portion of their annual revenue paying for storage space they don’t need. However, with the arrival of on-demand warehousing and fulfillment to the logistics space, businesses are now afforded with a much more flexible solution for managing seasonal demand. Here’s how:
Flexibility is the Key to Seasonal Inventory ManagementWith the winter holiday season fast approaching, many seasonal suppliers are already preparing their supply chains to handle the uptick in demand. Without the appropriate warehousing and inventory management strategy, many merchants will sacrifice margins to elevated storage costs. With the on-demand warehousing model revolutionizing the logistics industry it’s now easier than ever to find a flexible and scalable partner to transform seasonal inventory management from a pain point to a growth lever. To learn how Ware2Go can help your business manage seasonality, reach out to one of our logistics experts. What is a system for ordering items that have little or no value at the end of a sales period?What is a system for ordering items that have little or no value at the end of a sales period? furniture. a fixed-period system.
What percentage of invested capital does inventory represent?In summary, inventory is an integral part of a typical company's current assets and working capital. For certain types of companies, such as those in the general retail sector, inventory can represent a substantial part of current assets with over a 70% share.
What is the objective of inventory management quizlet?The objective of inventory management is to strike a balance between inventory investment and customer service. 1. To provide a selection of goods for anticipated demand and to separate the firm from fluctuations in demand.
Why is safety stock used in probabilistic models for inventory control quizlet?If demand is not uniform and constant, the stockout risks can be controlled by adding safety stock. Safety stock represents the buffer a company holds to reduce the risk of running out of inventory. Appropriate levels of safety stock balance stockout risks with the increased holding costs.
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