It’s never too early to plan for the holiday season, especially as a business owner. In the retail and restaurant industry, the holidays are known for creeping up way before their actual dates. In order to prepare for them, you need to focus on your holiday inventory management plan.
For many eCommerce businesses, holiday sales go into effect before the month of December and continue through the new year. This means you’ll need to have a solid holiday inventory plan in place to get through the holiday season and avoid overselling or underselling.
This blog post covers the meaning of holiday inventory, and why it matters, especially when it comes to inventory storage. You can also read about the seven best practices to follow for holiday inventory management.
Holiday Inventory - What Is Holiday Inventory?
Holiday inventory, or seasonal inventory, refers to products in high demand specifically during certain times of the year. These high demand products tend to have higher sales velocity which is affected by the holidays, changes in weather, or special events.
Commonly recognized holidays include:
- Black Friday
- Small Business Saturday
- Cyber Monday
Key Takeaway: The holiday season is often stressful for everyone involved, but with proper holiday inventory management, your business can thrive to its fullest potential.
Why Holiday Inventory Management Is Important
It’s crucial for a business to have solid inventory management practices in place all year round. This is what helps provide a seamless customer experience. However, it’s even more important to have these practices during the holiday season.
Businesses with strong holiday inventory management will have an advantage over their competition. Those who don’t may cause their happy customers to become frustrated and consider shopping elsewhere.
Inventory management keeps products organized in many aspects. This includes where each item is within the stockroom and the stock levels of each item. With this, businesses can stay on top of each item’s reorder point, safety stock levels, and out-of-stock items.
7 Best Practices for Holiday Inventory Management
Now that you understand the importance of holiday inventory management, you can work on developing a plan for your business. To do this, you need to familiarize yourself with some of the best practices.
Seven best practices for holiday inventory management include:
1. Improve Your Demand Forecasting Practices
Accurate demand forecasting is a way for businesses to optimize stock levels and successfully plan their holiday inventory. Businesses order only the stock items which are necessary to meet customer demand. This way, they can avoid overstocking their inventory and stock-outs.
Consumer habits are always changing which can make holiday inventory tricky to predict. However, inventory forecasting strategies and sales forecasts can help. It's possible to generate this information in an inventory report. You can also use these reports to learn about your days inventory outstanding, phantom inventory, weighted average cost.
2. Expand Your Supplier and Shipping Network
The COVID-19 pandemic caused many challenges for businesses in every industry and more specifically regarding the supply chain. This includes the food supply chain for businesses in the restaurant industry.
These challenges have added additional stress to retailers as they try to keep their customers happy by fulfilling their orders. During the holiday season, it’s ideal for businesses to consider expanding supplier and shipping networks. This is how they can satisfy their customers while providing them with a buffer against those challenges.
Expanding your supplier and shipping network will provide you with additional options in case there is a problem with your main supplier or shipper. As a result, your shipment won’t be affected. An example of this is having your business consider 3PL shipping.
3. Set Stock Levels
After forecasting your demand for the holiday season, you can gauge the products you need to have in stock. Once you do this, you can set your stock levels to make sure that your inventory levels don’t fall below that standard.
Something to consider is setting a reorder point. This way, your business can automatically reorder products that are low in stock.
4. Implement Inventory Management
Keeping track of your inventory is crucial regardless of whether you have a single-channel or omnichannel strategy for your business. During the holidays, inventory management software, such as restaurant inventory software, will do much of the work for you. It can help with reordering and prevent stockouts. You may want to consider using a centralized inventory system and an inventory scanner to conduct inventory checks.
5. Place Orders Early and Optimize Stock Replenishment
Two of the biggest concerns during the holiday season are product shortages and slow shipping times. In fact, many customers start their holiday shopping before Black Friday in order to ensure they have their orders fulfilled in time.
Even with accurate demand forecasting, it’s impossible to predict the exact customer need. This means that you have to develop a plan before holiday shopping begins in order to optimize stock replenishment. As a result, you can prevent stock-outs and fulfill demand spikes.
For example, you may consider increasing reorder points during the holiday season. Another option would be to leverage inventory management systems to track stock levels in real-time to know when replenishment is necessary.
6. Invest in Inventory Visibility
Businesses with warehousing facilities should consider investing in inventory visibility. This allows them to see how much stock they have and where it is within the warehouse or transit route.
During the holiday season, inventory visibility ensures all channels accurately show the items available for purchase. It also helps make demand planning efforts more accurate so that stock levels can reflect the current demand.
7. Understand Lead Time From Suppliers
In many cases, customer demand will increase during the holiday season which can cause an increase in difficulty communicating with suppliers. This is why it’s a good idea to reach out to them sooner rather than later.
When communicating with your suppliers, you will want to get information on potential lead times. The lead time will allow you to make better decisions regarding how much stock you should order upfront. It also provides insight into cut-off dates.
Frequently Asked Questions About Holiday Inventory Management
The holidays are known to sneak up on people. In the business world, they can bring up many challenges, especially when it comes to inventory. By properly preparing for the holiday season with a holiday inventory management plan, you can avoid frustration for your employees, customers, and business.
Here are commonly asked questions regarding holiday inventory:
What Is an Example of Holiday Inventory?
An example of holiday inventory is any product that customers want to purchase during the holiday season. This season includes Labor Day weekend, Halloween, and Christmas.
How Does Holiday Inventory Affect the Supply Chain?
Holiday inventory affects the supply chain because it can result in over-ordering which can cause drops in the supply chain and leave you with excess inventory. Due to this, holiday inventory is also considered the ideal time to increase sales; however, it also calls for a strict holiday inventory control process.
When Should We Use Seasonal Inventory?
Businesses should use seasonal inventory during specific times of the year in order to sell these products at a higher velocity. During the holiday season, businesses tend to see an increase in seasonal demand and this can cause them to stock up on holiday-specific items that may not sell year-round.