seasonal inventory issues in Pakistan

1. Assignment Topic:
SeasonalInventoryIssues

2. Contents
Seasonal Inventory.....................................................................................................3
Super Seasonal items.................................................................................................3
Seasonality................................................................................................................ 3
Stock-Outs................................................................................................................. 3
Obsolescence ............................................................................................................ 3
Excessive Stock and Dead Stock.................................................................................. 4
Seasonal inventory issues........................................................................................... 4
Efficient Management of Seasonal Inventoryissues..................................................... 5
The Challenges to Inventory Control ........................................................................... 8
Challenges with seasonality in the future ....................................................................8
Conclusion................................................................................................................. 8

3. SEASONAL INVENTORY
Seasonal inventoryreferstogoodsthatsee a fluctuationindemanddue toweather,events
or holidaysduringthe year.Thisrise andfall indemandare reflectedinyoursalesduring
these periodsandthusyourlevel of stock. These periodsof time oftencoincide withthe
differentseasons,andmanagersneedtobe proactive inpreparingforthe waxingand
waningof demandduringthese keytimes.
Super Seasonal items:
A productthat is veryresponsivetoseasonal demandsthenyouwill seeyoursalesandstock
levelsrise andfall withtheseseasonalfactors. The seasonal productsin:
Technology:generators, Ac,Heater, geezer,fans, exhaust,solarsystem.
In clothing:seasonal productsincludegloves, socks, muffler, highneck, sweaters, coats,
woolenstuff.Andstuff like Cotton, lawn, nylon, chiffon,etc.
Seasonality:
Seasonality,asitrelatestoinventorymanagement,isdefinedasa certaintime serieswith
repetitiveorpredictablepatternsof demand.Seasonalityistypicallymeasuredbythe
quantityof interestforsmall time intervals,suchasdays,weeks,monthsorquarters.
Seasonal Events
In Eidfestivals,cultural days, Muharram, National days(23March,6 Sept). Beside these
Mother’sDay, fatherday, valentine day, friend’s day, LaborDay,etc. On these special
occasions,some specificproductsare usedwhichare seasonal like aflag, clothing, caps,
shoes, cards, etc. Otherseasonal examplesinclude sportingeventsforexample.Whenthe
WorldCup rollsaroundeveryfouryearsandyou’re dealing withsportinggoods,thenyou
had bettermake sure thatyou stock-upforfootball boots,balls.
Stock-Outs:
If you fail toreplenishyourstockbefore a favorable seasonappearsthenyou’re likelyto
experience stock-outs,lostsalesandunhappycustomers shiftingtheirpurchasesto
competitors.Customersmaymake a run fora productthat’ssuddenlybecome insanely
popularthroughsocial mediaandviral marketing. Thisproblemresultsin:
 Lost contributionthroughthe lostsale causedbythe stock out
 Loss of future salesascustomersgo elsewhere
 Loss of customergoodwill
 Cost of productionstoppagescausedbystock-outof work-in-progressorraw
materials
 Labor frustrationoverstoppages
 Extra costs associatedwithurgent,oftensmall quantity, replenishmentpurchases.
Examples
Eid cards,bangles,mehndi,etc.are seasonal productsforthe eventof Eid.If a store owner
ina marketwhere there are manybanglesandmehndi sellersisunabletofill uphisstore
withthese itemsof seasonal inventoryinthe daysof Ramadan,he will face the problemof
stock outs.The customerswill alsobe unhappyandwill gotothe competitorsinthe market.

4. Obsolescence:
It isthe state of becomingoldfashionedandnolongeruseful evenitstill be ingoodworking
order.
Stockingupon what youor the marketthinkswill be abestselleralsoputsyouat the riskof
obsolescencewhenthe seasonbuyingfrenzyends.
a) Technological obsolescence:Suddenlynoone wantstokicka soccer ball around
afterthe final World Cup match.Technical obsolescence usuallyoccurswhenanew
productor technologyreplacesthe oldone,anditispreferredtouse the new
technologyinstead.
Examples:
 Replacementof cassette withCD/DVDs
 Replacementof floppydiskwithpendrives
b) Style obsolescence:Whenaproduct isno longerdesirablebecause ithasgone out
of popularfashion,itsstyle isobsolete.
Example
One such example isflaredlegjeansalthoughthisarticle of clothingmaystill be perfectly
functional,itisnolongerdesirablebecause style trendshave movedawayfromthe flared
legcut
Excessive Stock and Dead Stock:
Whenthe stock isleftto accumulate inwarehouses,riskof excessivestockanddeadstockis
high.Holdingfartoo muchstock than youcan sell tiesup yourcash. Andholdingstockthat
doesn’tsell for12 monthsisgoingto leadto a deadstock situation.All thismeanslossesfor
your business.Youneedtostartmovingoroffloadingthisstockwithdeepprice discountsas
an incentive.
Example
In western society, as 25th of December passes, it comes as no surprise that knitted jumpers,
fruitcakes,and SantaClausoutfitssee a falloff indemand.The shopping,eating,drinking
and giftingfrenzyhaspassed,andsohave consumerpurchasingdecisions.Salesof
Champagne andsparklingwine will rise aspeoplebuyinanticipationof the New Year.No
one wantsanotherreindeeroutfit — well,notforanotheryearat least.
Seasonal inventoryissues:
As youcan see,seasonal factorscanplayhavoc withyourcarefullyplannedinventory
purchases.Purchasingstockisa constantbusinessriskthat wholesalersand
distributors undertakeinrunningtheirbusinesses.Purchasesneedtobe paidincash to
suppliersevenaftergenerous30-daycreditterms.Thiscashcouldbe usedelsewhere in
your businessinsteadof beingtiedupinstockthat may still be unsoldafter30 days.
If you don’tmanage yourstock purchasesinline withseasonal factorsthenyou’re likelyto
experience stock-outs,overstockedgoodsorobsolescence whenseasonspass.Remember,

5. it costsmoneyto store stockin yourwarehouse,insure them,andyouruna higherriskof
facingtheft,damage ornatural disasterswhenyou’re overstocked.
EfficientManagementof Seasonal Inventoryissues:
Seasonal inventoryisstockwhichisindemandduringspecificperiodsof time likethe
holidaysandthe differentseasons.
Seasonal inventoryposesobstaclesinmaintaining inventorycontrol andstock
levels, warehousemanagement anddue toitsunpredictablenature,youcanneverbe sure
howmuch productis enough.
It’snot all doomand gloomif your productsare affectedbyseasonal demands.Infact,we’ll
showyouhow youcan turn thisintoan advantage if you’re willingtodiversifyabit.Onthe
otherhand,if your productsare not affectedbyseasonal ebbsandflows,thencongratulate
yourself.Youmayevenwishtocarry some seasonal stockif itcomplementsyourproducts.
Let’ssee howyou can live withseasonaldemand.
1. Make Forecasts from Historical Sales
Pull outyour papersalesreports,exportthemfromyouraccountingsoftware orsimplyview
theminside yourinventorymanagementsoftware.Thenvisualize yoursalesdatawiththe
helpof software orspreadsheetsratherthanrelyingonnumbertrends.The relativechange
betweenmonthscansurprise you!
You won’tcompletelyeradicate seasonal factorswiththisapproach.Butyou’ll come close to
reducingtheireffectsandimpactonyoursalesandstocks.Most importantly, inventory
managementsoftware takesmuchof the guessworkoutof forecastingandpurchasing
decisionsatyourbusiness.Remember,stockinguponproductsmeansthat you’re tyingup
cash that couldbe handywhenyouneeditmost.
An inventorymanagementsoftware solution,suchasEMERGE App,shouldbe at the heart of
everysuccessful wholesaleanddistributionbusiness.Andsuchinventorysoftware shouldn’t
cost an arm and a leg,making itsbenefitswell justified.Webapplicationsstore datainthe
cloudfor easyaccessfrom whereveryouare inthe world.Thisisimportantif yourbusiness
spansseveral marketsortime zones.
2. Deal in ComplementaryProducts
If seasonalityisgettingthe holdof youthendiversifyyourproductcatalog.Jumpintoother
areas thatcomplementyourexistingproducts.We call them“opposite”productsbecause
they’re the flipside of whateveryou’re selling.Buttheyfitintoyourproductcatalog just
nicely.
So,if you’re dealingwithsummerswimwear,forexample,thenbringonboardwinter
sportswearforsnowboardingandskiing.Youare dealingwithlifestyle andsportsproducts
afterall.You may evenfindthatthe same consumerswhosurf duringsummerbreakswill
alsoski and snowboardduringwinter.
If your productsenjoyrock-solidsalesthroughoutthe year, thenyoumightwishtoadd
seasonal products.Youmayenjoyan extraoomphinsalesontop of yourcore products.For
example,asawholesale wine merchant,youcarryred andwhite winesthatenjoyconsistent
purchasesthroughoutthe year.Youmay wishto carry summerspritzesforhotweatherand

6. warm spiritsforthe coolermonths.Thiswayyouenjoyanyadditional salesthatthese
seasonal productsbringyouwithoutaffectingyourunderlyingwine sales.
3. Diversifyinto International Markets
A biggerstepisto jumpintooverseasmarketsthatexperiencedifferentseasonalitypatterns
fromyour home market.Thisisa formof arbitrage.Back to swimwear, yoursuppliers may
be willingtoclearlastseason’ssummerswimwearatridiculousprices.Youbuytheirstockat
low pricesandthenexportand sell themoverseastocountriesenteringtheirsummer
season.
Likewise,sportssuppliersinAustraliaandNew Zealandmaybe desperatetocleartheirstock
of skis,snowboards,andclothing.Youbuythem, importthemandthenprepare themfor
sale inthe comingwinterseasoninyourhome market.
Thisway youshouldneverface anoverstockedordeadstocksituationif youmove your
stock aroundthe world’smarkets.Of course,you’ll needtofactorinshippingtime and
landedcosts ineach country.Customs,insurance,andfreightcostscanadd up!
4. Dump Slow MovingProducts
You can use promotional discountsandclearance salesasameasure of lastresort toclear
your seasonal stock.Throwsmall discountsmid-seasonandthendeeper, crazydiscountsat
the endof the seasonapproaches.Youcan’t avoidnothaving sales, butyoumightas well
make themworkfor you.
Afterall,the fasteryousell lastseason’sstock,the quickeryou’ll convertthatinventoryto
cash. You can thenfocuson the nextseason.There’saverylittle pointincarryingdeadstock
intothe nextseason.The beststrategyisto grinand bear itduringthe clearance sales.If it’s
any consolation,the marketingbuzzsurroundingyoursaleswillgenerateawarenessfrom
your customers. Andhopefully,repeatbusinesswhenyou’rewell intothe nextseason.
5. Track Historical Data and Plan Ahead
By lookingatdata fromyour past sales,youcandetermine the lifecycle of aproduct,
includingthe price andmethodof promotionthatperformedthe best.Youcanalso
calculate the average lengthof the seasonandplanto have the right amountof stock to last
throughoutthe peakperiod.
Additionally,lookingatyoursupplierhistorycanprovide insightintothe leadtime of
purchases.Thatis,what isthe estimatedtime betweenorderingthe goodsandactually
receivingthem?Trackperformance datatoplanaheadfor seasonal changes.
6. Automate Purchase Orders
Automatingpurchase ordersisafeature of many robustinventorysystems.Youshould
neverrunout of stock duringthe peakof yoursalesseason.There islesstime tomove goods
and turn themintosales,soyoudon’twantto be heldbackby stock-outs.
Withan automatedpurchase ordersystem,errorsare reducedbetweenthe supplierand
business.Especiallywhenthereare seasonal surgesinthe numberof purchase orders,
havingthisprocessautomatedensuresefficiencyandvisibilityamongall parties.
7. Use Predictive Analysis

7. Real-time technologyallowsyou tomake accurate predictionsaboutthe stockyouhave
currentlyandthe stock youwill needinthe future.Usingdataminingandpredictive
modeling,youcanoptimize yoursafetystockandkeepwhatyouneedat-handtoa
minimum.If youhave multiple locations,make sure youhave abalance of inventoryamong
your sites.
8. OfferDiscounts and Market It
Markdownsare inevitable with aseasonal inventory.However,youshouldcarefully
schedule themtomaximizeturnoverandminimizeprofitloss.
Considermakingthe mostof yourmarkdownsanduse it as an opportunitytogenerate
marketbuzz.Clearance andsalescouldbringtrafficandawarenesstoyour brandthat could
carry over toyour nextsalesperiod.
9. Calculate Your Inventory Expenses
You shouldbe aware of the costsof goodssoldand the costsof holdinginventory.These
calculationsindicate if youhave toomuchstockon handand pointto changesthat should
be made.In preparationforpeakseason,youshouldalwayskeepinventoryexpensesin
mind.
What will yourbusinessdoif the seasonal itemsdon’tsell?Will youliquidate orwill youhold
it until nextseasonforresale?Forecastyoursalesand marginsand anticipate all associated
inventorycoststomake your decision.A highervolume of goodsisintroducedtoyour
supplychainduringseasonal periods.Yourinventorymanagementsystemshould
have features tohelpyouhandle that.
10. Bundle Items Togetherand Sell as a Package Deal
Consumersare more encouragedtobuya productif theythinktheyscoreda value
deal. Amazonusesavariationof thistechnique bydroppingpricesonexpensive itemslike
televisionsandthenofferingadapterandcable add-onsatfull price.
Takingthat same idea,retailerscanbundle Halloweencostumeswithrelatedaccessories.
For the holidays,businessescanbundle lesspopularitemswithproductsthatdowell and
offeritas a giftset.
Some consumerslike tobuyseasonal itemsaheadforthe nextyearaswell.A limitedtime
package deal couldprovide more incentive tomake the purchase now.Especiallyfor
seasonal inventory,the goal istoconvertstock to salesassoonas possible.
11. Manage Your Personnel byCoordinatingSchedules
Make sure youhave the inventorytohandle peakseasonandthe resourcestomanage the
relatedinventoryactivities.See that youremployeesdon’ttake avacationoverthe same
periodbycoordinatingschedulesinadvance.
An influx of itemswill needtobe checkedintoinventory,stockedontoshelves,and
transactedto customers.There isnothingworse thana businessthathasenoughinventory
to sell,butincapable tohandle the volumeof salesdue toa lackof personnel.
12. VendorManaged Inventory

8. Developavisible supplychainandcommunicate withyoursuppliers.With vendormanaged
inventory,youcando all that andmore.Not onlycan youmaintainorderprocessing
accuracy, but youcan also track inventorylevelsusingminimum,maximum, andreorder
points.Fora seasonal inventory,havingyourstockat the righttime and locationisthe key
to achievingaseamlesssalesperiod.
Additionally,considerdrop-shippingseasonal productssoyou’re notleftwithanabundance
of obsolete stock –particularlyif you’re asmall businessanddon’tproduce yourowngoods.
Notonlywouldthisallowforlowerinventoryandmaintenancecosts,butitcouldalso
increase yoursalesandprofitability.
The ChallengestoInventoryControl:
A surge indemandforsuch productshas obviousbenefitsforretailersspecializinginthese
items,suchas increasedsalesand moreover,increasedprofitability.However,the sudden
influx of demandisusuallyaccompaniedbyadrasticallyreduceddemandsoonafter.This
can be a difficultthingtojudge intermsof inventorycontrol,asbusinessesneedtoorder
justthe right amountof inventorytomeetdemand.
In thissituation,businesseswanttohave justenoughinventorytomeetdemand,butthis
can be a difficulttasktoachieve.Seasonal inventorymayresultin over-orderingof stock,
and if supplydropssoonerthanexpected,youmaybe leftwithanexcessamountof stock.
For thisreason,while seasonal inventorycanbe an excellenttime forincreasingsales,itcan
alsopose a real challenge toyourinventorycontrol processes.
Relatedly,seasonal inventorymeans increasedcoststoyourbusiness,sinceyouwill often
have to stock upon the inventorywell inadvance of the surge indemand.Thismeans
investingalotof capital in inventory,soyoumustensure youhave enoughcashonhandto
tide youoveruntil the salesbegintoincrease whenthe time arrives.
Seasonal inventory canbe unpredictable,eventhoughyoumaybe able to predicta general
surge and decrease indemand.While youmaybe able topredictthatdemandwill increase
duringChristmas,forexample,itmaybe difficulttopredictexactlywhendemandwill begin
to wax and wane.Forthisreason,seasonal inventorycanpose a challenge toyourinventory
control plan,makingitdifficulttoprepare adequatelyforthe changesindemand.
Challengeswithseasonalityinthe future:
As e-commerce shoppinggainsmomentumandbecomesmore dominantasamarketplace,
consumerswill be spoiltforchoice like never.Delayeddeliveriesandout-of-stockshelves
will notbe toleratedbycustomers.Thismakesitevenmore essentialtoperfectseasonal
inventorymanagement.
Companies willalsohave tocompete witheachotherforsupplies,assuppliersonlyhave a
limitedcapacityforproduction,andbuyerswhonotifythemearlyonwill be getting
preference.
Summingup,inboththese scenarios,makingaccurate demandforecastingandproviding
greatervisibilityandaccesstosuppliersintoseasonal inventorycanbe keyfactorsin
achievingsuccesswithseasonalinventorymanagement.
Conclusion:
Seasonal factors cannotbe ignored.Asa businessowner,youneedtobe well-informed
aboutweatherpatterns,holidaysandeventsthatdirectlyimpactyoursales. Savvy

9. wholesalers anddistributorswillaimtoreduce the impactof seasonal factorsby diversifying
theirproductsand markets.Evenmore will use order,purchase andinventorymanagement
software tomake well-informeddecisions. Nodoubtthatseasonal inventoryhasits
complicationsandissues,butthose problemscanbe minimizedbyintelligenthandlingand
managementof thisinventoryanditcanresultingood profitmargins.Youjustmustbe
vigilant.
The bestresultsare achievedwhenthe importance of seasonalinventory managementis
understoodthroughoutthe company.Inpractice,the processof selectionhasa major
bearingonthe resultsof seasonmanagement.If the seasonal selectionistooextensive,
there will be residual stocksregardlessof the control method.The management,onthe
otherhand,shouldbe able to determinethe goals,especiallyhow service level and
inventoryriskshouldbe weightedfordifferentproducts.If it’sdecidedthatall products
shouldbe available inall storesall the time untilthe end of the season,there isnowayto
avoidresidual stocks.
If properseasonal inventorymanagement isputinplace.Real benefitscanbe achieved,
directlyaffectingthe company’sresults.