5 Secrets to Optimizing your Inventory During the Busy Season
Inventory planning is one of the most fundamental tasks of wholesalers. Fundamental, but not easy, and the upcoming holidays make it even harder. Yet inventory optimization is one of the keys to a successful holiday season and a great start to the new year.
Luckily, there are several ways you can enhance your wholesale inventory management and stay on top of things during the busy season.
1. Forecast Your Inventory
Forecasting for wholesale needs is easier said than done. After all, if retailers have to anticipate months in advance what consumers will demand right before the holidays, you have to anticipate what retailers will anticipate even earlier. Confused yet?
That sounds tricky, but you don’t have to do it alone. You can lean on historical data and analyze sales from previous years. Forecasting software is also a big help for accurate predictions.
Even though there’s no guarantee that hit items from years gone by will do well again, there are evergreen products (e.g. ugly sweaters or sturdy socks that distant relatives seem so intent on gifting) consumers will definitely seek out in stores.
In addition, you can rely on data gathered by your business partners. Since retail inventory management for small businesses is not much easier at this time of year, you can rest assured that your business partners will present their most accurate predictions to you.
Your forecast is never completely finished. Make sure to keep comparing your predictions to your actual sales. Tracking the accuracy of your forecast will help you detect any discrepancies early on, when you still have time to order more of a certain product — or offer another one at a discounted price.
The forecast should include your staffing needs. It’s quite likely that you may need additional help when the busy season hits. Think ahead and plan to hire seasonal workers to man your pick and pack stations.
2. Inventory Planning and Management
Once you’ve stocked up your warehouse with the forecasted quantity and range of products, it’s time for some serious wholesale inventory management in the most basic sense of the term.
Efficiently organizing your warehouse can save you lots of time when you start receiving, picking, packing, and shipping off orders. You don’t want workers bumping into each other, or going on long warehouse hikes every five minutes to get popular products randomly placed on back shelves.
The ABC Analysis is one of the most convenient inventory optimization methods used by wholesalers all over the world.
Sort your inventory items into three categories. In category “A,” group your fastest moving and highest quantity items. In “B” come the slightly slower moving goods, while “C” holds your least important stock.
Arrange your inventory around the warehouse so that category A items are the most easily accessible, with B slightly behind and C on back shelves. This way you’ll ensure that when it comes to picking and packing, the fastest moving stock will be the easiest to reach.
3. Streamlined Supply Chain
Optimized inventory planning requires a seamless supply chain. This goes for both incoming and outgoing products.
The status of your supply chain depends on many factors, most of which are out of your control. However, there are some you can (and should) control. Be on time with all your tasks, including picking and packing, order updates, payments, and everything else that you can control.
In supply chain management, transparency is key. Show your business partners how things are run at your wholesale operation, and what kind of service you expect in return.
There are various software platforms designed to help make your wholesale supply chain transparent and manageable. Using these would take a lot of work off your shoulders, especially in the holiday season.
If your forecast is 100% effective you won’t need a contingency plan, since it means you’ve sold every single piece of your inventory.
Though that’s highly desirable, unfortunately, it’s also unlikely (unless you have a crystal ball or employ a few warlocks).
In all other cases, you need to have a backup plan on what to do with your excess inventory. Depending on the items, especially their seasonality and expiry dates, you need to know if you’re better off selling them as fast as possible, or hanging onto them for a few more weeks.
Obviously, if you have a ton of chocolate Santa figurines, it’s best to get rid of them while it’s still December, or even November for that matter. But if you find a shipment of bathing suits that customers didn’t pick up for their exotic winter breaks, it may be a good idea to put them on the back shelves and get them out again in the spring.
5. Return Policies
Planning inventory management for small businesses includes a good return policy, even for wholesalers. If you accept returns on whatever grounds, your customers will know that you are a reliable business partner and stand behind your products.
But returned shipments are a pain to handle, especially if they arrive out of the blue. Don’t let that happen.
When you create your forecasts for the season, calculate with a certain percentage of returns based on last year’s data. Make sure you have a process in place for dealing with all returns.
You need to know what to do with them (e.g. try to resell, or contact the manufacturer in case of faulty products, etc.), and where to store them while you figure out how and when to send them on their way again.
Following these tips won’t guarantee you a stress-free holiday season. That can only be done if you move to a deserted island with only bottlenose dolphins for company. But if you’re well prepared and organized, you can expect fewer surprises in the countdown to the holidays.
And when it comes to these kinds of surprises, the less, the better.