5 Steps to Managing Seasonal Demand
- Organize your data.. In order to forecast seasonal needs, you must have data on what has happened in the past and for...
- Trend your data.. There are various techniques to processing your data for seasonal trends. One of such techniques is...
- Increase your safety inventory.. During times of seasonal demand, it is quite easy for...
- Identify seasonal products and the length of peak seasons.
- Know your lead times for seasonal products.
- Estimate demand increase during your peak season.
- Identify materials and labor needed to meet seasonal demand.
How can you reduce the effects of seasonal demand?
Here’s how you can reduce the effects of seasonal demand on your company to help ensure you’re prepared across the year. Developing a safety stock (a surplus of stock that you can use to satisfy high demand if needed) is of critical importance in surviving fluctuating seasonal demand.
How to use seasonality in a demand forecast?
If seasonality is relevant to an item, you should adjust the demand accordingly before using it in a forecast calculation. Best practice is to keep seasonal demand and other variable factors separated from your base demand calculations in order to keep the data clean and easy to use for forecasting going forward. 4.
What is seasonal demand and why is it important?
What is seasonal demand? Seasonal demand is defined as a certain time series with repetitive or predictable patterns of demand due to re-occurring seasonal events. These patterns can re-occur over days, weeks, months or quarters and can make it harder for businesses to forecast future demand trends.
How do seasonal fluctuations in demand affect your business?
Almost every manufacturer or distributor can expect to have seasonal fluctuations in their demand. Everything from peak holiday sales activity to droughts in sales due to seasonal weather changes can influence what demand the market will have for your products.
How can seasonal demand be improved?
How to optimise your competitiveness by forecasting seasonal demandTake advantage of peaks in demand. ... Prevent excess stock levels. ... Keep suppliers informed and orders on time. ... Make informed stock decisions. ... Identify which products are affected by seasonal demand. ... Understand when the peaks will happen.More items...•
How do you manage seasonal inventory?
Here are 8 ways to better manage your seasonal inventory:Track Historical Data and Plan Ahead. ... Automate Purchase Orders. ... Use Predictive Analysis. ... Offer Discounts and Market It. ... Calculate Your Inventory Expenses. ... Bundle Items Together and Sell as a Package Deal. ... Manage Your Personnel by Coordinating Schedules.More items...•
How do you manage seasonal risk?
Reduce the Risk of Seasonal BusinessReducing Seasonal Business Risk. Many businesses, from farms and ski resorts to surf shops and landscapers, depend on seasonal employees to keep them successful. ... Make a Plan. ... Branch Out. ... Foster Relationships. ... Know Your Target Market. ... Know Your Numbers.
How do you control seasonal fluctuations?
How to successfully manage seasonal fluctuationsGet on top of cash flow. Irrespective of fluxes in your business cycle, there will be staff and suppliers to pay throughout the entire calendar year. ... Invest in seasonal staff. ... Maximise sales. ... Promote your business during off-peak. ... Diversify your business.
How should a company plan for major spikes in seasonal demand?
Optimize your competitiveness by forecasting seasonal demandTake advantage of peaks in demand. ... Prevent excess stock levels. ... Keep suppliers informed and orders on time. ... Inventory optimization. ... Identify which products are affected by seasonal demand. ... Understand when the peaks will happen.More items...•
How would you explain 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.
How do seasonal companies survive?
Manage your cash: Small businesses live or die on cash, not profits. The single-most important step for long-term survival of a seasonal business is managing cash flow. If summer is your high season, start setting aside a percentage of income in a reserve account. 2.
What is seasonality risk?
A seasonal risk is a risk of loss that only applies during certain times of the year. It generally only affects businesses that only operate during certain times of the year, such as haunted houses, or ones that have peak times of production or income, such as toy manufacturers.
What is meant by seasonality?
Seasonality refers to predictable changes that occur over a one-year period in a business or economy based on the seasons including calendar or commercial seasons.
How do you handle fluctuating demand?
Dealing With Fluctuating Demand in Supply ChainUSE REAL-TIME DATA. ... IDENTIFY AND UNDERSTAND CHALLENGES. ... AUTOMATE PROCESSES WHEN POSSIBLE. ... FIND RELIABLE SUPPLIERS. ... INTEGRATE SALES AND OPERATIONS. ... IMPROVE DEMAND FORECASTING. ... LOOK FOR WAYS TO INNOVATE.
What is seasonal demand business?
Seasonal demand is the expected fluctuation in demand influenced by external factors that most businesses can expect to face. Seasonal demand can pose numerous complications, and it often requires experienced management to help anticipate and navigate difficult circumstances.
What are seasonal demand products?
Definition of seasonal demand consumer interest in purchasing particular products only during a specific period within the calendar year. For example, Christmas ornaments and snow ski equipment are subject to seasonal demand.
When should seasonal inventory be used?
Seasonal inventory is stock which is in high demand during particular times of the year, such as during Christmas or Halloween. These periods of time often coincide with the different seasons, and managers need to be proactive in preparing for the waxing and waning of demand during these key times.
How do you deal with fluctuations in demand?
Dealing With Fluctuating Demand in Supply ChainUSE REAL-TIME DATA. ... IDENTIFY AND UNDERSTAND CHALLENGES. ... AUTOMATE PROCESSES WHEN POSSIBLE. ... FIND RELIABLE SUPPLIERS. ... INTEGRATE SALES AND OPERATIONS. ... IMPROVE DEMAND FORECASTING. ... LOOK FOR WAYS TO INNOVATE.
How would you explain safety inventory?
Safety stock is an extra quantity of a product which is stored in the warehouse to prevent an out-of-stock situation. It serves as insurance against fluctuations in demand.
What are seasonal items?
A seasonal product is a product that sells only, or especially, during certain seasons. This is in contrast to a year-round product that sells regardless of the time of year.
What are some examples of seasonal demand?
Seasonal demand examples in the US include religious festivals such as Christmas or Ramadan, annual events like Valentines Day or Halloween and seasonal weather patterns, including snow in winter and a hot climate in summer; these can all lead to seasonal variances in demand for many products.
What is seasonality in demand?
It’s important to remember that seasonality only refers to the portion of demand fluctuation accounted for by a reoccurring pattern. Therefore, you only need to identify demand patterns that repeat systematically over time. Below is an example of other demand factors that can impact or inflate your normal base demand.
Why is it important to not over forecast seasonal demand?
Equally, it’s important that you don’t over forecast for seasonal demand fluctuations. Investing too much money in inventory can lead to cashflow problems and an unhealthy balance sheet.
Why is forecasting seasonal variance important?
Forecasting for seasonal variances will ensure you have sufficient levels of stock available to take advantage of increases in product demand at peak times of the year. If you rely on your busy seasons to make most of your money, you need to be on top of your game and ensure optimum product availability during these times.
How does demand forecasting help?
With accurate demand forecasts that account for seasonality, you can optimize stock levels and make informed decisions on safety stock levels and replenishment rules. With the right stock available you can achieve your service level targets, and free up working capital that’s usually sunk into excess inventory. Both factors could have drastic impact on your profitability and competitiveness.
Is demand forecast accurate?
Marketplaces are more dynamic than ever, so it’s rare for a demand forecast to be 100% accurate, especially when seasonality is part of the equation.
Does every product in a warehouse sell at the same pace?
Fact: not every product in your warehouse sells at the same pace throughout the year. Some will experience peaks and troughs in their sales due to the coming and going of seasons and months.
Spread out demand over the year
Use your sales and marketing tactics to spread demand across the year by promoting outside peak times. This could potentially lower the chance you’ll lose customers because you’re too busy or the wait time is too long. If you can, encourage customers to bring their purchasing forward or deliver later to even out the sales bump.
Find alternative revenue streams
Determine if you can diversify what you deliver during quiet periods. Adding variety could provide additional opportunities to redirect resources and be more resilient to fluctuating demand across the year.
Take advantage of sudden demand
If it’s possible, take short-term advantage of anything that occurs out of the ordinary even if it’s only for a few days. Imagine your team is in the playoffs and you want to get the most out of the moment. Consider opening for longer during the day or for seven-day weeks if you need to. Other ideas to potentially extend your reach include:
Maintain excellence when busy
If you do find a sudden increase in demand, remember to expand or manage customer service levels. You won't want to risk your reputation by running out of product or creating unhappy customers with a long wait for delivery. If needed, identify and access surplus product or services to satisfy temporary high demand. To help do this, you could:
Shrink during the offseason
Think about what you can do to efficiently scale down for the expected drop in sales. This could mean closing down parts of the business (think ski fields in summer) and using the time to prepare for the next season. It’s not unusual for some businesses to have two separate parts to their business that open and close with the seasons.
Next steps
Almost every business has some form of seasonal demand. Highs and lows in volume can provide both opportunity and risk, but it doesn't need to spell disaster. How you plan, manage and respond in your business can help your business succeed.
How to forecast seasonal demand?
In order to forecast seasonal needs, you must have data on what has happened in the past and for what time frames. For most industries, a month by month report on what your demand and supply chain needs is sufficient to create an accurate forecast. However, managers must ensure their data includes the demand a firm has for their own suppliers, the orders of their customers, and, the material needs directly have associated with those time frames. Now, if seasonal demand is a concern that you have just become aware of and you have no supporting data, fear not! There are many creative ways for businesses to back track their information. If you do not have direct sales data, you can go by staffing, resource utilization, and your own orders from your suppliers to serve as a hint to what your past demand actually looked like.
How to back track your business?
If you do not have direct sales data, you can go by staffing, resource utilization, and your own orders from your suppliers to serve as a hint to what your past demand actually looked like. 2. Trend your data.
Is seasonal demand a good problem?
This means it could be that customers suddenly flood to your doors for a specific product in waves which you’ve never seen before. And, it is a good problem to have.
Is it good to be in contact with your downstream partners?
It is a good thing to be in very frequent contact with your upstream and downstream partners as they may be able to give you hints as to what is coming down the pipe . In the same vein, you will also be able to inform your downstream partners of any trending to help them succeed.
Is seasonal demand bad?
Managing seasonal demand can be awesome or terrible. Businesses that have dialed in a system enjoy the benefit of sudden surges in revenue, profits, and new customer acquisitions. Businesses who have ill prepared for such times tend to lose out on these opportunities and can even lose long term business partners and customers. So, follow these five steps on your path toward success in the coming season!
How to counter seasonal demand?
There are many things that can be done to counter the effect of seasonal demand, but the best thing you can cost effectively do is uses previous trading history to predict peaks and troughs in your demand and then proceed to effectively communicate it with all your stakeholder so they know what to expect in the coming months.
What is seasonal demand?
Seasonal demand is the expected fluctuation in demand influenced by external factors that most businesses can expect to face. Seasonal demand can pose numerous complications, and it often requires experienced management to help anticipate and navigate difficult circumstances.
What are the issues faced by seasonal businesses?
Common issues faced by seasonal businesses include inadequate stock levels to meet seasonal demand, too many or too few staff for the period, and suppliers being unable to meet increases in demand during busier periods for the business.
Why is it important to plan for seasonal fluctuations?
When planning for seasonal fluctuation, it is of critical importance that the adaptive decisions made are effectively communicated to all those concerned . The reason for doing so is that it enables an understanding of what is expected from all individuals involved in the business.
What happens if your company is unable to meet customer demand?
However, if your company finds itself unable to meet customer demand, it will suffer from a loss of sales and potentially reputational damage for your company.
How to forecast seasonal demand?
How to forecast for seasonal demand. There are four basic rules to forecasting seasonal demand: 1. Identify which products are affected by seasonal demand. It’s important to remember that seasonality only refers to the portion of demand fluctuation accounted for by a reoccurring pattern. Therefore, you only need to identify demand patterns ...
What is seasonal demand?
Seasonal demand is defined as a certain time series with repetitive or predictable patterns of demand, due to re-occurring seasonal events. These patterns can re-occur over days, weeks, months or quarters and can make it harder for businesses to forecast future demand trends. Seasonal demand examples in the UK include religious festivals such as ...
Why is it important to not over forecast seasonal demand?
Equally, it’s important that you don’t over forecast for seasonal demand fluctuations. Investing too much money in inventory can lead to cashflow problems and an unhealthy balance sheet.
How does demand forecasting affect stock levels?
With accurate demand forecasts that account for seasonality you can optimise stock levels and make informed decisions on safety stock levels and replenishment rules. With the right stock available you can achieve your service level targets, and free up working capital that’s usually sunk into excess inventory. Both factors could have drastic impact on your profitability and competitiveness.
Why is forecasting seasonal variance important?
Forecasting for seasonal variances will ensure you have sufficient levels of stock available to take advantage of increases in product demand at peak times of the year. If you rely on your busy seasons to make most of your money, you need to be on top of your game and ensure optimum product availability during these times.
What are some examples of seasonal demand in the UK?
Seasonal demand examples in the UK include religious festivals such as Christmas or Ramadan, annual events like Valentines Day or Bonfire Night and seasonal weather patterns, including snow in winter and a hot climate in summer, can all lead to seasonal variances in demand for many products.
How to improve forecast accuracy?
There are many techniques to improve the accuracy of your forecasts, such as identifying demand outliers and investigating their impact on your calculations. In addition, working out forecast error will help you understand the level of error in your previous demand forecasts.
What is demand planning and sales forecasting?
Demand Planning & Sales Forecasting. As supplier data regarding inventory turnover, seasonal demand, and customer deliveries accumulate within the system over time, businesses can leverage the on-demand solution to develop sales and demand forecasts. This allows them to effectively plot out required inventory levels over the course of the year. Ultimately, companies can use these insights to optimize the amount of inventory they maintain year-round, thereby avoiding the costs of excess storage space while also protecting against potential stock outages..
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.
What is JIT in supply chain?
Just in Time (JIT): The JIT inventory method is the method most commonly used by SMB’s because it requires the least intensive demand forecasting. JIT supply chains are replenished on an as needed basis. They are a high-risk supply chain management strategy and can reward merchants with increased capital on-hand, but as we’ve seen with recent supply chain disruptions, they can also leave merchants with empty shelves when seasonal demand hits.
What happens if warehouse availability is not adequate?
If warehouses are unable to cope with large scale shifts in seasonal storage and fulfillment needs, suppliers may be forced to reduce inventory or curb production, which can impact order fulfillment speeds and result in more frequent stockouts. This in turn leads to slower delivery times and lower customer satisfaction. Given that seasonal suppliers only have a few months to achieve the majority of their annual revenue, these types of obstructions can severely damage their bottom line.
Why do warehouse rates spike?
Warehouse and Fulfillment Rates Spike with Demand. As demand for warehouse space and fulfillment services go up, so often do the prices. Merchants may be moving more inventory in their busy season but at a greater operational cost.
What is on demand storage?
Complete Storage Scalability. On-demand warehousing provides businesses with complete flexibility over the levels of inventory they maintain year-round. Warehouse space can be scaled up or down as needed, and with flexible contracts and no start-up fees, they’re a low-risk option that minimizes investment in fixed assets. Businesses pay only for the space that they use, when they are using it and rates are consistent year-round. This enables season merchants to keep overhead low during the off-season and rapidly scale up their inventory in time for the busy season without being sidelined by excessive costs or insufficient storage space.
What is streamlining fulfillment?
Streamlined Fulfillment: Streamlining fulfillment through a single outsourced fulfillment provider enables both aggregated and comparative views sales performance and order profile by channel and geographic market. This allows merchants to make strategic decisions around inventory allocation and marketing spend.
Precise Forecasting
A sudden surge in sales is unpredictable, but you can identify patterns when fluctuations are likely to happen. You can do this by making accurate forecasts using previous sales data. A forecast allows you to prepare for shifts that may affect cash flow and staffing needs.
Sell Slow Moving Products
You might have to sell slow-moving products to make room for inventory you need to meet customer demand during seasonal sales peaks. If a product has been on your shelves for months, it’s time to put it on sale. You can sell it at a substantially discounted price or bundle slow moving products together.
Even Distribution of Inventory
Your inventory management system should provide you with an overview of the high-demand products. Review the numbers and determine which items you need to buy more of and which ones you can reduce. If your small business caters to an international market, it helps to understand the demand for your products.
Use the First in First Out Method
This method moves the oldest product in your inventory to customers first. This approach is ideal if your small business sells seasonal items and perishable goods. Consider using this method during fluctuations so that you can boost profits while certain items are in high demand.
How accurate is seasonal demand forecasting?
Determine the reliability of your forecasts - The dynamic nature of the marketplace means that forecasting seasonal demand cannot always be 100% accurate. However, there are ways to improve the accuracy of your forecasts, such as by identifying demand outliers and understanding their effect on your calculations.
How to determine seasonality?
Determine which products are seasonal - To detect seasonality, find a recurring pattern in the demand of your products over time. Observe existing historical data within a specific time frame and ask yourself this question, Can you see a similar demand pattern year-over-year, month-over-month, or week-over-week? Next, find the correlation between each year, month, or week. If you see a pattern, you have a reliable seasonal demand.
What is seasonality in forecasting?
Seasonality in forecasting requires business owners and supply chain managers to identify which goods have seasonal patterns and which do not. And for the goods that do fluctuate in popularity, the challenge is in determining when they will see the highest and lowest demand.
How to create a demand forecast?
The first step to creating a demand forecast that reflects changes in trend and seasonality is understanding the typical cycles experienced by seasonal products. Generally speaking, there are three types of time-based seasonal patterns.
What is seasonality in business?
Monthly seasonality - This covers cyclical demand for goods and services over the course of a month. For example, you may find that your customers spend more when their paychecks arrive either at the beginning or the end of the month.
Why do products in warehouses have seasonal variations?
In reality, certain products naturally experience peaks and dips in sales due to factors like holidays and weather changes. This is a phenomenon known as seasonal variation.#N#For example, the fourth quarter of the year with its combination of Halloween, Black Friday, Cyber Monday, and Christmas is incredibly profitable for online retail sales, fueling $187.25 billion into the US eCommerce industry in 2019.#N#Seasonality in forecasting requires business owners and supply chain managers to identify which goods have seasonal patterns and which do not. And for the goods that do fluctuate in popularity, the challenge is in determining when they will see the highest and lowest demand.
What causes seasonality in real estate?
Natural seasonality - This seasonality is caused by natural factors, such as the weather or changing seasons. For example, vacation resorts see a surge in guests during the spring and summer months in the northern US, and autumn and winter in the south. Meanwhile, the winter months are generally a quieter period for the real estate sector.
