Forecasting Seasonal Demand Fluctuations

Businesses often face seasonal fluctuations in demand, driven by holidays spikes like Christmas and popular shopping events such as Boxing Day in the UK, Canada, and Australia. These periods can lead to significant order surges.

So, how can a 3pl warehousing businesses capitalize on these prime shopping seasons? In this blog we can discover, how do companies such as MacMillan SCG prepare for these seasonal demand changes in terms of inventory and logistics.

What is seasonal demand?

Seasonal demand refers to shifts in consumer buying habits throughout the year. These changes may be driven by seasons, such as increased demand for snow boots in winter and sunglasses in summer, or special occasions like Christmas and Thanksgiving, and New Year. Fortunately for businesses, these fluctuations are among the most predictable, allowing for easier advance planning.

Causes of seasonal demand fluctuations

Factors involved in Seasonal Demand Forecasting?

Seasonal demand forecasting involves predicting customer demand during the increase time frame of anticipated order volume increases. By analyzing historical data, and market trends MacMillan identifies when order volumes particularly rise, enabling them to purchase sufficient inventory, confirm transparent costs, and ensure delivery on time and in full (OTIF) without stockouts.

MacMillan advanced operations empower brands to prepare for both seasonal and future demand. MacMillan integrated software and tracking dashboard provide real-time inventory visibility, aiding in accurate seasonal demand forecasting.

Many products experience demand fluctuations based on seasonality. For instance, yard tools see increased demand during spring as people undertake spring cleaning. In summer, items like air conditioners and ice creams see a sales spike.

Navigating Seasonal Demand in 3pl warehousing

While demand fluctuations can be challenging for businesses, they present valuable opportunities if they are predictable. Let’s delve into how seasonal demand changes impact 3pl warehousing.

The Benefits of Seasonal Demand

  • Maximize Sales: Seasonal demand spikes, mainly during the holiday season, present a golden opportunity for well-prepared businesses to boost sales. In 2021, U.S. holiday spending reached (about $2,700 per person in the US)
  • Proactive Inventory Planning: With these demand spikes recurring annually, businesses can proactively plan their inventory procurement. By stocking up ahead of time, they can meet increased consumer demand.
  • Strategic Marketing: The predictable nature of these spikes allows businesses to strategically plan their marketing and sales efforts in advance. Seasonal marketing campaigns and discounts can be prepared to capitalize on peak shopping time frames.
  • What are the risks and challenges in seasonal demand fluctuations?

Utilizing an inventory planning solution that offers historical analysis and forecasting can mitigate these risks. Previous data trends help predict when and how much to restock, ensuring businesses reorder enough inventory in time for demand surges.

Logistical challenges are another hurdle associated with seasonal demand spikes. Businesses may struggle to fulfill all orders due to limited workforce or resources during peak periods. Additionally, courier services like DHL often have lower capacity during these times, leading businesses to opt for alternative shipping solutions.

Partnering with a 3PL warehousing provider like MacMillan can alleviate these issues. A 3PL warehousing experienced workforce handles the entire fulfillment process with visibility. Their established relationships with leading courier services ensure your delivery needs are met, even during peak seasons throughout GTA and 80% of the western region.

How to Forecast Seasonal Demand and Stay Ahead

Accurate forecasting is crucial for managing seasonal demand effectively. However, brands must also know how to leverage this data for proper planning. Here’s how to get ahead of seasonal demand and capitalize on peak times.

Establish Seasonal Goals

Start by setting goals for the year to create a blueprint for seasonal patterns and determine the stock levels needed for specific times. Establishing these goals helps evaluate performance and reconcile actual sales volume against initial targets.

Collect and Analyze Historical Data

Review past years’ sales to identify high-demand periods and order volumes. This ensures you maintain an adequate stock to meet customer demand and satisfaction.

Key metrics to examine include forecast vs. order accuracy, forecast accuracy, inventory turnover, and order fill rate.

Use Sales Insights to Rank and Segment Products

Analyze historical sales data to identify demand patterns and understand how demand varies for different products throughout the year. Brands can estimate how demand changes compared to regular periods, but it’s important to remain cautious.

By following these steps, brands can effectively forecast seasonal demand, maintain optimal stock levels, and maximize sales during peak periods.

Taking Action

With your historical data analysis and seasonal forecast in hand, it’s time to implement your plan

  • Compare Forecasts to Historical Sales: Analyze your demand forecast against past sales data to assess prediction accuracy. This helps refine future forecasts.
  • Maintain Supplier Communication: Ensure smooth inventory reorders and receive early warnings if suppliers can’t meet increased demand, allowing time to find alternatives.
  • Monitor Inventory Levels: Track stock levels, reorder needs, and timing for replenishments to avoid stockouts or overstocking.
  • Avoid Overstocking: Overstocking is costly and can hurt your bottom line. Instead, order smaller quantities more frequently to stay flexible and adapt to demand changes.
  • Consider a 3PL Solution: Outsource your fulfillment process to a third-party logistics provider. They offer advanced inventory planning and management software, aiding in data analysis and improving forecasting accuracy.

How does MacMillan manage seasonal demand fluctuations?

Accurate demand forecasting is crucial for managing seasonal demand fluctuations. With MacMillan proprietary software, you can leverage historical sales data and consumer buying behavior to make precise inventory reorder plans, avoiding stockouts and overstocking. The software provides SKU-level performance tracking, helping you identify which items will see increased demand in specific seasons. It also offers real-time inventory monitoring, predicting stock longevity and alerting you when to reorder. MacMillan full-service fulfillment solution handles storage, inventory management, and order fulfillment. By informing MacMillan about expected demand spikes, you can ensure efficient management of seasonal orders without last-minute hassles.

Key takeaways

In today’s dynamic market, businesses often face seasonal demand fluctuations. These periods can lead to significant order surges, presenting both opportunities and challenges.

MacMillan’s proprietary software leverages historical sales data and consumer behavior to make accurate inventory reorder plans, avoiding stockouts and overstocking. Their real-time inventory monitoring and SKU-level performance tracking ensure efficient management of seasonal orders.

MacMillan Supply Chain Group Elevate Your Logistics Experience

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Meet the Author:

Jenifer Lee

Jenifer Lee

Jennifer Lee is a prominent expert in the realm of 3PL logistics, known for her strategic acumen in forging strong partnerships, designing efficient logistics networks, and enhancing customer service in supply chain management. Her career path has taken her across various logistics domains, from e-commerce fulfillment to warehouse management systems.
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