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Warehouse

8 Ways to Better Manage Seasonal Inventory

October 31, 2018


Forecasting your inventory levels can be tricky, especially when it comes to inventory that relies on seasonal demand.

With seasonal items like holiday decorations, winter equipment, or back-to-school supplies, you have a shorter time frame to turn inventory into sales. You could be forced to heavily mark down your items if you overstock, and you don’t want to run out of stock because that would drive your customers to competitors.

While the major key to managing seasonal inventory is accurate planning, there are other considerations you can make to maximize your profit potential.

Here are 8 ways to better manage your seasonal inventory:

1.  Track Historical Data and Plan Ahead

By looking at data from your past sales, you can determine the life cycle of a product, including the price and method of promotion that performed the best. You can also calculate the average length of the season and plan to have the right amount of stock to last throughout the peak period.

Additionally, looking at your supplier history can provide insight into the lead time of purchases. That is, what is the estimated time between ordering the goods and actually receiving them? Track performance data to plan ahead for seasonal changes. 

2.  Automate Purchase Orders

Automating purchase orders is a feature of many robust inventory systems. You should never run out of stock during the peak of your sales season. There is less time to move goods and turn them into sales, so you don’t want to be held back by stock-outs.

With an automated purchase order system, errors are reduced between the supplier and business. Especially when there are seasonal surges in the number of purchase orders, having this process automated ensures efficiency and visibility among all parties.

3.  Use Predictive Analysis 

Real-time technology allows you make accurate predictions about the stock you have currently and the stock you will need in the future. Using data mining and predictive modeling, you can optimize your safety stock and keep what you need at-hand to a minimum. If you have multiple locations, make sure you have a balance of inventory among your sites.

4.  Offer Discounts and Market It

Markdowns are inevitable with seasonal inventory. However, you should carefully schedule them to maximize turnover and minimize profit loss.

Consider making the most of your markdowns and use it as an opportunity to generate market buzz. Clearance and sales could bring traffic and awareness to your brand that could carry over to your next sales period. 

5.  Calculate Your Inventory Expenses

You should be aware of the costs of goods sold and the costs of holding inventory. These calculations indicate if you have too much stock on hand and point to changes that should be made. In preparation for peak season, you should always keep inventory expenses in mind.

What will your business do if the seasonal items don’t sell? Will you liquidate or will you hold it until next season for resale? Forecast your sales and margins, and anticipate all associated inventory costs to make your decision. A higher volume of goods is introduced to your supply chain during seasonal periods. Your inventory management system should have features to help you handle that.

6.  Bundle Items Together and Sell as a Package Deal

Consumers are more encouraged to buy a product if they think they scored a value deal. Amazon uses a variation of this technique by dropping prices on expensive items like televisions, and then offering adapter and cable add-ons at full-price. 

Taking that same idea, retailers can bundle Halloween costumes with related accessories. For the holidays, businesses can bundle less popular items with products that do well and offer it as a gift set.

Some consumers like to buy seasonal items ahead for the next year as well. A limited time package deal could provide more incentive to make the purchase now. Especially for seasonal inventory, the goal is to convert stock to sales as soon as possible.

7.  Manage Your Personnel by Coordinating Schedules

Make sure you have the inventory to handle peak season and the resources to mange the related inventory activities. See that your employees don’t take vacation over the same period of time by coordinating schedules in advance. 

An influx of items will need to be checked into inventory, stocked onto shelves, and transacted to customers. There is nothing worse than a business that has enough inventory to sell, but incapable to handle the volume of sales due to a lack of personnel.

8.  Vendor Managed Inventory 

Develop a visible supply chain and communicate with your suppliers. With vendor managed inventory, you can do all that and more. Not only can you maintain order processing accuracy, but you can also track inventory levels using minimum, maximum, and reorder points. For seasonal inventory, having your stock at the right time and location is the key to achieving a seamless sales period.

Additionally, consider drop-shipping seasonal products so you’re not left with an abundance of obsolete stock – particularly if you’re a small business and don’t produce your own goods. Not only would this would allow for lower inventory and maintenance costs, but it could also increase your sales and profitability.

 


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