Warehousing Specialists - Matching supply to seasonal demand

Recession or no recession, most retailers and to some extent our whole economy, rely on the big increases in demand that are generated by Christmas, Easter and other festivities.  The more “must do” days that can be generated, the more we all spend.  The growth in the celebration of Halloween in the UK in recent years is an example of how good marketing can boost sales simply by making us feel that we are missing out on something special if we don’t join in.  Were it not for these peaks in sales, many businesses would not survive and the Christmas peak in particular generates the cash to see much of the retail trade through the rest of the year.

But what does this do for the overworked supply chain management team, struggling to cope with big variability of demand whilst under pressure to reduce inventory?  To some extent the peaks are predicable; over the years a patter develops, but the peaks still present a challenge for the supply chain.  Orders have to be placed months in advance for goods from China and the Far East and so there is no scope for just in time deliveries as far as the in-bound supply chain is concerned.  It is only too easy to get it wrong - too much stock or too little.  With the falling sales that have been experienced in recent months planning has become much more difficult and these days no business can afford to be overstocked any more than it can afford to have empty shelves.  It would be difficult enough if demand was level throughout the year but with large and (particularly in these times of recession) unpredictable peaks the requirement is for much more responsive supply chains.  With European sourced goods, stocks still have to be planned and orders placed well in advance, but the lead times are certainly shorter and planning is easier, albeit not easy.  When we combine this potential improvement in response with rising transport costs and an increase in the costs of procuring goods from China we can see why there are good grounds for a move back towards more European and domestic sourcing as a way of matching supply to seasonal demand.

The likelihood is that more and more retailers will take a long look at Far East sourcing and will begin to see that it is not always the best option.