Tuesday, September 17, 2013

Managing Seasonal Inventories

Managing inventories is difficult to estimate because of many variances such as weather and accidents. Due to the variability, sales persons have difficulty making a decision under uncertainty. To minimize this uncertainty and variability, Douglas Kent emphasizes supply chain visibility and supply chain agility. Of course, companies can simply buy the third party software like inventory optimization or supply chain optimization tools to manage their inventories. However, the costs of these software is too expensive for small and mid-sized companies. If large-sized companies spend money on the third party software, it is not guaranteed that the software will minimize uncertainty and variability of inventories. According to Active International, there are four essentials to managing seasonal inventories.

Step 1: Plan for “The Perfect Season”
Step 2: Build flex space into your warehousing footprint.
Step 3: Communicate, communicate, communicate.
Step 4: Have a contingency plan.

I think most important one among four essentials is to communicate. Although companies have a plan for "The Perfect Season", they cannot predict what it is going to happen in the future. Also, building flexible space by using the third party warehouse company will require companies to spend additional money. However, communicating with customers enables companies to get personalized data from their customers so that they can forecast seasonal inventories based on the feedback of customers they contacted.


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