Black Friday, 25 November, is one of the year’s biggest shopping days when physical stores and e-commerce tempt shoppers with their offers.
For the past ten years, Black Friday has seen sales increase annually and is one of the most important sales occasions of the year. The surrounding days are also increasing in trading. Now, the whole week is called Black Week due to the increase in trading in the surrounding days, including Cyber Monday.
The extended Black Week sales period sees increased pressure on companies to get ahead on their demand planning and ensure they have the necessary inventory. This year, purchasing teams are also facing continued challenges due to global supply chain and logistics pressures, component shortages and soaring prices for electricity and fuel.
Successful sales during this period come down to many factors. Inventory, POS, shipping, web shops and accounting software must be able to keep up to avoid lost revenue. The key is to keep track of your inventory planning and purchasing processes.
We’ve summarised an essential guide and tips on ensuring you stock the right products during this busy sales period.
Tips for inventory planning during Black Friday
In the run-up to Black Friday and Black Week, buyers and warehouse planners must invest in stocks that generate revenue without risking them becoming shelf warmers and increasing warehouse storage costs after the campaign period.
Analyse sales and make accurate demand tests
The first step for good inventory planning is to use accurate demand forecasts. These should be based on previous sales periods during Black Week, Black Friday and Cyber Monday or other similar promotional periods that can help the analysis. It is also important to consider qualitative data. Since the market is changing at a dramatic pace, there is also information you need from your sales team, marketing team and your customers.
The promotions also depend on external conditions, such as seasonal demand, market trends, economic conditions, and other trends that can cause unpredictable fluctuations in demand.
One solution is to automate the demand forecasts to avoid having to guess how much inventory should be kept during the sales period. With automated demand forecasting, all product demand is calculated dynamically based on statistical methods of demand forecasting. These are much more efficient, as they analyse historical demand patterns at the SKU level and subsequently assign the appropriate algorithm to calculate demand based on demand patterns per item.
Update inventory levels in real-time
Compared to physical stores, e-commerce needs an attractive product range and a user-friendly platform and process that ensures orders are handled quickly, efficiently and correctly. Today’s customers are more demanding and expect product quantities displayed in the online store to match actual inventory levels.
This creates a need for systems that work in real-time. Cancellations, reservations, and returns must also have a live impact on the inventory levels displayed in your systems. Ensuring you have the right amount of the right product at the right time to meet demand and delivery times requires a complete and continuous overview of your inventory.
Redistribute inventory between warehouses
It is common to have too many of some goods in one warehouse and a shortage in another. It is also common to sell out of stock in one region and buy new in another region. During a big promotional period like Black Week, it can be extra important to ensure you can redistribute items to make the most of all warehouses and maintain healthy stock levels in all locations.
If you have a central warehouse that distributes items to smaller regional warehouses, be extra careful with your inventory distribution. Only send the items each warehouse needs instead of those they want; don’t assume they’ve requested the correct quantity. Creating forecasts for multiple warehouses can lead to unnecessary orders and too many items in stock. Instead, combine demand from all the spokes and create a central forecast, or produce separate forecasts for each spoke (which considers local adjustments) and aggregate the forecasts accordingly.
Keep track of lead times and increase visibility in the supply chain
During large sales periods, it is common for several companies to demand the same goods from their suppliers, which can create longer lead times. As suppliers’ lead times increase, so does the risk of running out of stock or longer lead times for the end customer. One way to counteract this is to get full insight into your suppliers’ lead times so you can continuously calculate order parameters and adjust to avoid delivery problems.
In the event of high demand for stock items, there is also a risk of tension between customers and suppliers. An open dialogue about delivery capability is crucial to addressing supply chain bottlenecks and building a good relationship. Building that communication with suppliers requires reliable data, regular communication and transparency.
If you have reliable data, you can give your suppliers better forecasts of future sales, which provides suppliers with a better position to handle order orders better.
Inventory optimisation systems include dynamic lead-time features that help mitigate the effects of supply disruptions. The order parameters are automatically adjusted to ensure sufficient inventory levels cover upcoming demand. You can also set up order schedules in advance and compare suppliers based on lead times, unit prices and minimum order quantities — and get recommendations on which supplier can most cost-effectively deliver on time.
How inventory optimisation can help you meet Black Friday demand
At EazyStock, we do not believe it is possible to “guess” your way to success. Data should always guide purchasing decisions and provide control and confidence that the right items are in stock at the right time.
With a demand forecasting and purchasing optimisation tool, you can automatically optimise replenishment for the best inventory values and service levels.
One of the most important tips for Black Friday, Black Week and Cyber Monday is to start planning in time! In previous years, most companies began ordering their inventory after the summer. Many companies have started planning in the spring in recent years due to increased challenges from more supply chain disruptions.
If you want to be more prepared in good time next Black Week, keep track of your stock levels and feel confident in your demand planning, contact us today for help.
Originally published at https://www.eazystock.com on November 17, 2022.
