We’re closer and closer to Halloween! This spending holiday affects dozens of retailers, drop shippers as well as large manufacturing companies. A well-prepared business makes out the most of seasonal inventory management in order to maximize sales and avoid overstocking errors.
Seasonal inventory management is known to be a difficult task for all types of companies. However, there are some key steps that each business can follow to increase the chances of successfully completing its seasonal inventory processes. Let’s dive into seasonal inventory management and the tips that businesses should follow to do it efficiently!
What is Seasonal Inventory?
Seasonal inventory refers to products that are sold more quickly during a specific time period. For instance, pumpkins on Halloween and Christmas trees during the Christmas season are expected to have an increase in their seasonal demand. The surged demand may occur due to holidays or due to the variations of seasons. Usually, seasonal products appear to decrease considerably after the end of the period that their demand reached a peak. Thus, it is needed for businesses to be prepared, and well-organized to manage their inventory and warehouses appropriately.
In cases where companies haven’t structured their inventory management processes well, errors will occur. The most common errors are overstocking issues, increased storage expenses, and understocking errors. To prevent such cases it is recommended to follow seasonal inventory management techniques. Specifically:
- First In First Out (FIFO)
- Last In First Out (LIFO)
- Just In Time Inventory (JIT)
- ABC Inventory
Besides following the above techniques, there are some tips that you can follow in order to manage the inventory of your business based on seasonality.
4 Tips To Manage Seasonal Inventory Efficiently
1. Seasonal Product Categorization
The categorization process of seasonal inventory includes the segregation of products based on 3 different factors. Specifically, the lifecycle of the product, the lead time of its purchase, and its seasonal product cycle.
i. The Lifecycle of The Product
This refers to the product’s life which includes 4 different stages. Particularly, the introduction, growth, maturity, and decline. Seasonal products aren’t associated with growth and maturity. That’s because they are introduced in the market and after the end of the season they decline.
ii. The Lead Time of The Purchase
The period between the decision to purchase items and when those products are actually obtained is known as the purchasing lead time. This lead time is made up of the time spent on order preparation, supplier lead time, the amount of time that the product spends from the time it is sent from the supplier until the delivery from the buyer, inspection time, and putaway time. Reduced purchase lead times enable businesses to be more responsive when making their own deliveries to clients, which is one of the best methods to boost performance and customer satisfaction.
iii. Seasonal Product Cycle
The length of the season typically determines if the product is able to meet in-season demand. At the beginning of the season, companies must deliver to stores the entire quantity anticipated to be in demand. To avoid understocking errors, it would be suggested to maintain in-store a bigger amount of the quantity that is expected to be sold. By answering the following questions you will be able to categorize your products based on the season’s length.
- What products you’ve sold in the past during the specific season?
- What products and quantities do you expect to sell?
- Was there any unexpected factor that affected the selling process?
To manage efficiently your seasonal inventory you should master demand forecasting. In other words, you should analyze seasonal demand periodically according to your sales history, trends, and spatial factors to determine the demand forecast. Afterwards, you’ll be able to manage successfully the operating costs and profits while also having access to more insights regarding the strategy you should follow.
3. Streamlined Fulfillment
In order to handle seasonal inventory efficiently you have to streamline your order fulfillment processes. Streamlining fulfillment through order fulfillment software will provide your company with rich order performance information that will be of significant importance when you manage your seasonal inventory. All these insights will help you make strategic decisions to maximize your business’s profits.
4. Flexibility and Scalability
To manage appropriately your seasonal inventory you need to organize your warehouse with complete scalability. Organizing your inventory and warehouse with flexibility will give you the opportunity to reduce costs and prevent your company from an increase in unexpected inventory risks. Inventory theft, human errors, overstocking and understocking issues will be eliminated because of the scalability of your inventory management.
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In A Nutshell
Seasonal inventory management may be difficult at first glance but with the appropriate preparation will be much more easier and profitable for your company. To avoid inventory management stock issues, you should follow the most significant inventory management techniques such as LIFO, FIFO, etc. Combining those techniques with the 4 tips mentioned above you will successfully handle your seasonal inventory and warehouse!
Stamatia Manolara is a Digital Marketer and Content Creator for Megaventory. Her passion is staying up to date with the latest digital marketing technologies as well as upgrading her skills and developing new ones.