Expert Column: How Grocers Can Ensure Holiday Product Availability

Are we dedicating enough time to plan for seasonal products?

The November/December holiday season is a key success factor for any grocer. Between increased overall grocery spending and once-a-year promotional products targeted at the holidays, such as eggnog, this is an exciting and potentially stressful time for grocers.

As holiday planning begins, marketers are dreaming up new colors and fragrances of products, merchandising teams are thinking of new ways to bundle products, logistics teams are improving the speed to market (and consumer), and store managers are thinking through how to lay out their stores for the holidays to capture impulse buys and maximize sales. With the amount of activity taking place and all of the hard work, are these seasonal products receiving the amount of attention they demand as they flow through the supply chain?

Managing the supply chain at any time of the year is challenging, but it can be especially so during what's typically the busiest time of the year. How do you change and adapt, presuming you don't have a large man in a red suit and a sled making your deliveries? How do you ensure that you have the necessary supplies and product to meet demand while limiting additional expenses such as the use of warehousing buffer stock?

Enabling Dynamic Planning

Most food manufacturers and consumer goods companies understand the opportunities presented during November and December, and develop their holiday promotions, marketing plans and supply/demand forecasts months in advance. This is an important part of the overall plan for the year. To manage this, some grocery retailers use data from previous seasons and market insights to predict sales. Information is shared along the supply chain to ensure the grocer has the ingredients, components and products it needs in the right place, at the right time.

However, the best-laid plans can and do go awry and predictions are rarely 100 percent accurate year on year. How do you ensure you don't run out of the holiday versions of your customers' favorite candies, or avoid having to sell too many of those candies at 50 percent price reductions on New Year's Day?

To avoid the problems of over- or under-stocking supplies, companies must view holiday demand planning as more than a one-time event. Grocers need to monitor the actual demand versus plan during the lead-up to the holidays, making adjustments along the way. Grocery stores and food retailers need to ensure that they have the technology processes and discipline in place to look at their data in real time, share it across the organization, interpret what the data means, and make the necessary tweaks. These might be prompted by the following questions: Where are the signs pointing to higher-than-anticipated demand? Where across the overall marketplace is demand outstripping supply, leading to higher ingredient or product costs?

And while having the right systems in place to look at data in real time is important, it's just as vital that the data are available to other partners along the supply chain, including sales and marketing. These partners can provide additional insight into new or adjusted retailer plans and orders, and then work with supply chain managers to ensure the right quantities are in place. To stay ahead of the curve, this shouldn't be a one-time exercise, either, but something that happens regularly throughout the year.

Establishing Cadence

The holiday season can add multiple wrinkles to the supply chain. Between now and the end of the holiday season, marketing and sales will need to revisit the anticipated demand, while manufacturers adjust their initially forecasted raw materials, and procurement managers will accordingly have to modify plans around what, when and where they buy from. It sounds simple, but the concern is that not enough people are taking advantage of the correct data and making real-time inventory adjustments. Without that consistent and ongoing evaluation, companies can get caught with too little supply, or end up with too much holiday stock destined for price cuts, resulting in lower margins.

A retailer's year can be made or broken over the holidays. As you take the time to plan to meet those needs, remember that being able to make adjustments in real time in a coordinated fashion is a must for success.