Holiday Stocking: Seasonality’s Impact on the Supply Chain
For many organizations, planning for seasonal holiday demand can make or break their profitability for the year. According to an NRF report, holiday sales have averaged about 19 percent of annual retail sales over the last five years, with some retailers reporting a far higher percentage. Buying activity during this period surpasses all other seasonal events, with holiday retail sales rising substantially since the turn of the century, according to Statista.
From a demand planner’s perspective, any recurring spike in demand represents a seasonal shift. Some examples include back-to-school, Valentine’s Day, Halloween, and actual seasonal changes during spring, summer, fall, and winter. For example, healthcare providers prepare and plan for months to have supplies on-hand for the seasonal flu.
Making sure the right products are in the right place at the right time creates new levels of complexity when it comes to planning for demand spikes during the holiday season. Demand planning starts early since retail orders for products are submitted months in advance. Manufacturers and wholesalers engage in planning for goods that are ultimately delivered within a relatively short timeframe.
Most retailers have restrictions on when products can be delivered, specifying the earliest receipt data as well as a cancel-by date. With e-commerce sales reaching new heights, the question of where to deliver the goods becomes paramount. According to Statista, the 2018 holiday season retail e-commerce revenue amounted to roughly 120 billion US dollars, while 2020’s holiday season is projected to be over 190 billion US dollars.
Demand Planning for Retail
So, what is the right amount of product? And which product lines are likely to be the most successful? Modern demand and supply planning practices enable unprecedented levels of accuracy and inventory optimization. Today’s supply chain leaders use complex artificial intelligence and predictive modeling based on a wide variety of variables and deep data sets. Vanguard’s Predictive Planning Platform™ automatically selects the ideal statistical method for any seasonal product with advanced AI-based strategies built upon a wide range of data inputs to deliver highly accurate forecasts.
Retailers need to worry about how much stock is needed to maintain their brick-and-mortar stores. They must also focus on online shoppers and deliver the product to their door seamlessly and efficiently. Consumer buying habits have been shifting toward e-commerce, and COVID-19 has accelerated this process. To accurately forecast this multichannel, non-linear demand, retailers should adopt predictive, AI-based supply chain planning tools capable of interpreting seasonal vs. standard demand patterns.
Successful retailers invest in modern supply chain optimization software – like Vanguard Predictive Planning™ – ensuring distribution and fast delivery, along with inventory dependability that capitalizes on seasonal demand. The software increases their ability to fulfill additional holiday orders and ensures optimal distribution, resulting in greater sales, reduced overstocks, and timely delivery.
Despite the intensity the holidays bring to businesses of all kinds, modern supply chain solutions, from demand planning to distribution, have evolved to enable the movement of billions of dollars in goods right to the consumers’ front door – and into those Holiday Stockings.
Scenario Planning During COVID-19