Seasonal inventory management software refers to goods and products whose demand varies based on seasonal factors like holidays or environmental changes throughout the year. This creates issues of overstocking/Excess stock or understocking and managing supply chains effectively.
Entire Business operations seasonal excess inventory need help managing appropriate stock movements levels by either over- or under-ordering products at various points throughout the year - creating challenges in effectively running supply chains that rely on them.
What Is Seasonal Inventory?
As defined, seasonal inventory refers to inventory tracking that experiences variable demand throughout the year and reaches highs and lows at specific seasons of the year.
Seasonal Inventory Challenges
Before purchasing stock for your business growth, consider all seasonal factors:
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Stockouts
More adequate stock replenishment before peak seasons could leave customers satisfied and possibly going for competing establishments, increasing the likelihood of stockout scenarios and ultimately leading to customer discontentment and defections.
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Overstock
In an overstock situation, maximum Stock Levels products may no longer be in high demand, and therefore, maintaining excessive inventory costs can have severe ramifications for cash flow and may ultimately necessitate steep discounts to sell your merchandise to your customers.
Examples of Seasonal Inventory
Here is an outline of the seasonal inventory:
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Holiday Stocktake
The term holiday merchandise usually brings to mind products available for sale during specific festivals or holidays, such as Holi or Diwali, which are classified as holiday inventory/merchandise.
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Winter or Summer
Seasonal clothing inventory for clothing retailers includes summer and winter clothing collections.
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Events
Our event inventory management solution covers events like music concerts, T20 cricket matches and Indian Premier League competitions. Items might include pint glasses, flags, jersey decorations, or apparel such as T-shirts and hats for these activities.
Related article - Mastering Inventory Management: A Quick Guide to Boost Your Business Efficiency
Seasonal Inventory Management Methods
Here are a few effective techniques for effectively managing seasonal inventory management processes:
- Just-In-Time (JIT)
- FIFO
- LIFO
- ABC decomposition
- Quantity of Economic Orders (EOQ)
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Just-In-Time Inventory
Just-in-Time (JIT) inventory systems provide inventory in minimal amounts when needed - helping reduce holding expenses and dead stock while improving operational efficiency in shops with robust forecasting systems. Shops that use JIT efficiently will find it beneficial; its benefits lie in accurate demand estimation enabling it to reduce costs and boost efficiency levels simultaneously.
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First In, First Out (FIFO)
A popular method for inventory valuation, First In, First Out (FIFO), means selling out first what has arrived from suppliers when using this strategy to value inventory. It is ideal for retailers selling seasonal or perishable goods like clothing.
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LIFO
According to the last in, first out (LIFO) theory, any stock you purchased recently will be the one sold first. Seasonal demand could drive supplier costs higher - using LIFO can offset this added expense and allow old stock to remain in your warehouse longer before being transferred out for sale. If selling non-perishable goods such as apparel, this method works exceptionally well given that older stock could remain longer without expiring before leaving your warehouse.
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ABC Evaluation
Using ABC evaluation techniques, inventory items are divided into three distinct groups (A, B and C) according to value and then organized accordingly.
- Pricey products with higher revenue-generating potential
- Products that fall between average sales volume and profitability on the market
- Popular products yet not very profitable products
5. Economic Order Quantity (EOQ)
So, it is basically an inventory management tool and with this tool, it's easier than ever before to calculate how much inventory to order at one time based on three specific factors - price, demand and supplier constraints.
Price Ordering Based on Demand Retaining costs has always presented business owners with numerous challenges, so using an inventory movement manager who understands both Just in Time (JIT) and Economic Order Quantity (EOQ) correctly could reduce holding expenses significantly.
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Best Practices For Seasonal Inventory Management
Let's examine ways of improving the seasonal inventory management system to meet customer inquiry demand while increasing profits.
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Utilizing Past Data for Better Forecasting
Analyzing past sales trends in detail is one effective strategy for increasing forecast accuracy. Doing this allows you to gain a deeper insight into when customers will purchase products, providing vital insight for adjusting inventory levels accordingly.
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Conduct Presales
One way of accurately gauging potential seasonal sales of goods is conducting presales and providing cash flow before expanding inventory accuracy. Knowing what was purchased during a presale allows you to make adjustments as necessary before increasing stock/ timely restocking levels for seasonal goods sales.
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Bundle Complementary Products
Bundling complementary products is an efficient way of maintaining seasonal inventory counts control. Bundled sales offer the potential to move unsold goods quickly while simultaneously cutting storage costs.
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Decrease Slow-Moving Inventory
Inventory management process that remains on hand for too long depletes the resources of businesses. It takes up storage space, drains operating funds, and may lead to stockouts if left sitting around for too long.
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Keep a Close Eye on Inventory Metrics
Staying abreast of inventory status metrics is integral for effective seasonal inventory management.
Seasonal Inventory Management Strategies
- For optimal inventory control during seasonal changes, one must assess stored SKUs as well as seasonal demands
- Utilizing techniques that enable you to predict product demand will simplify seasonal inventory control.
- Assuming knowledge of demand and supply, a logistics manager must devise a plan to increase access to SKUs with the highest turnover.
- Just-in-time (JIT) production can be an extremely cost-efficient manufacturing and logistics approach at facilities with seasonal inventories, where JIT production plays an essential role. At its heart lies the belief that goods (raw or finished) should arrive exclusively upon being requested in warehouse storage facilities.
- On-demand warehousing can also help manage seasonal inventory visibility more effectively by assigning it to a logistics service provider for a predetermined duration, taking on responsibilities such as order processing, storage and reception duties.
How To Manage Seasonal Inventory Effectively
Some key strategies for effectively managing seasonal inventory include:
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Accurate Demand Forecasting
Accurate demand forecasting can be an extremely effective strategy for best inventory management software during seasonal peaks. By considering past sales figures and current market conditions, precise demand forecasts provide insight into which products will likely become in demand in the coming weeks or months.
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Move Unsold Stock
It is wise to hold onto unsellable inventory for a short time as this could eventually go bad, so organize a clearance sale of slow-selling items using promotions to incentivize customer satisfaction to purchase their seasonal merchandise.
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Put Predictive Analysis Into Play
A predictive approach or tools may allow you to reduce Real-time inventory insights levels while increasing safety stocks at once, provided all locations of your warehouses receive equal inventory efficiency allocation.
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Improve Order Processing
One practical and crucial first step to successfully managing seasonal inventory control software solutions should be improving the order fulfillment process. Coordinating product selection, packing stock, packing, shipping, and processing returns can become challenging at peak times, so making every effort possible to speed up order processing should become part of a strategic plan for managing seasonal inventories effectively.
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Provide Combo Packages
Customer demand will be more motivated to buy your product if they believe they received a great value deal. Some companies reduce the prices of expensive items like televisions and cell phones before charging the total cost for accessories and extras later. Using this tactic, home decor items alongside furniture or clothing with matching accessories could be presented to customer service as "package deals."
Conclusion
Although seasonality cannot be removed entirely from business operations, you can take proactive rather than reactive approaches when dealing with it. Sellers can manage their pipeline with demand forecasting and planning assistance provided by an inventory management system for small business and warehouse management single platform. They can then use past performance and profitability reports to monitor which products are moving quickly or slowly and react strategically as necessary.
