If you’re in the business of manufacturing or distributing products to consumers, you certainly experience seasonal fluctuations in your demand. Perhaps you get a lot of orders in summer, perhaps in winter, but you certainly get a high increase during the holidays. It all depends on the type of products you’re offering.
While increases in your product demand are definitely beneficial to your business, they can cause some inventory storage problems. Take a look at the most common inventory storage issues that seasonal demand can cause.
Running Out of Stock
If you don’t refill your stock properly before a particular seasonal event, or the season that brings you the most sales, you might run out of stock quickly once the buying frenzy starts.
If you happen to run out of stock, your customers will simply move on to your competition to satisfy their needs. Apart from the obvious disadvantage, your customers may even completely turn to your competitors for all their future needs.
This is why you should always replenish your stock in advance before seasonal demand so that you don’t risk losing money.
Increased Risk of Obsolete Inventory
If you stock up on the products that you think your customers would purchase during a particular peak season, you might experience obsolescence. You might be left with tons of products that no one wants to buy once the peak seasons passes.
For instance, if you’re selling winter-related products, you should know that people are not likely to buy them in spring or summer.
Stocking up on more products than you can sell in autumn and winter would only increase your warehouse costs. Moreover, all those obsolete products would occupy the space for the other products your customers are looking for, so you might end up facing a serious sales decrease.
Accumulating Dead Stock
When you have a lot of obsolete inventory in your storage, you also risk experiencing a dead-stock situation. Dead-stock can be either outdated products, such as tech products, or it can include seasonal products.
If you let such stock accumulate in your inventory storage, you may be left with dead stock that translates into losses. To solve this problem and minimize losses, you would need to offer your products at significantly lower prices that would compel your customers to purchase them.
Solutions to Seasonal Demand Challenges
Seasonal demand can really wreak havoc on your inventory storage, both in good and bad ways. Luckily, with a good strategy to perfectly deal with every seasonal demand, you can effectively increase your sales.
The best solutions are to diversify your products and expand to international markets. You also need to look at your past sales to generate accurate forecasts, and there are lots of software solutions for this. Last but not least, you need to partner with fast suppliers and a reliable provider of trucking and warehouse services.