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How to Position Inventory in Warehouses via Smart Forecasting in Preparation for the Holiday Season

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Is your inventory ready to meet the challenging demands of this year’s holiday shopping madness?  It’s a great time of year for business, but if you’re not ready, it can backfire pretty quickly.

Throughout the year, inventory management is important and generally controllable.  Having too much inventory ties up cash flow and too little inventory will create unsatisfied customers.  However, the holiday season is a particularly challenging time of year for inventory control.  During this short, but frantic time of year, you rely on suppliers to deliver materials needed to manufacture your products and customers rely on you to deliver quality products in a reasonable timeframe.  If there is a breakdown in any part of the supply chain, there will be some very unhappy consumers.

In order to best prepare for the busiest shopping season of the year, engage your marketing, sales and operations team in a collaborative planning effort. Evaluate the current year leading up to the holidays to recognize changes in sales and product trends.  Then set a meeting with your critical internal departments to make sure that you have a game plan.  Include marketing and sales, distribution, and inventory control departments to determine what products are going to be hot and what may not sell quite as well.  Decide on what products are going to be marketed heavily and those that may sell well as a related or add-on item.  Distribution can prepare for backorders and packing and shipping issues.  Most importantly though, purchasers can begin to plan for inventory needs.  Remember to be flexible and prepared to alter the plan based on actual sales.

Once you have a plan, work with suppliers to make sure you know when you can get materials delivered and the cost for expediting orders as the holidays near.  Determine end dates for last minute material deliveries so that you have the time to manufacture your products and deliver them in time for customers to stock their shelves.  Contact your customers now to determine what products they might be ordering for the holiday season and what they think might sell well this holiday.

Communicate with your critical departments, suppliers, and customers often as the holidays approach and be prepared to change plans to meet actual demands.  If you find delays in supplier delivery or your own product delivery, notify your customer before they call you.  Keeping customers apprised of their product deliveries, even if they may be late, will go a long way toward building loyalty.

Start preparing now for the upcoming holiday shopping season.  Make reasonable forecasts, flexible plans to execute those forecasts, and communicate with your suppliers, critical internal departments, and customers.   Instead of another chaotic holiday season, you’ll deliver products on-time, encounter fewer backorders and returns, and be able to enjoy the holidays too!  For additional information about inventory control and forecasting, please contact RockySoft.

The process described above contains elements of a traditional “SIOP”, Sales Inventory & Operations Planning process.  RockySoft offers regular “SIOP” educational webinars. Please refer to the link for a complete listing.

By Jeffrey Porter with RockySoft, Microsoft Dynamics software provider for demand planning

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