Prepare your business for peak season with essential skills like inventory management, demand forecasting, and cash flow management. Learn how to boost efficiency and handle demand.
Peak seasons are both a blessing and a challenge for business owners. While it brings in demand and revenue, it also tests a company’s ability to manage multiple projects and orders simultaneously. During these high-demand periods, any organization without sufficient inventory management skills will have a hard time delivering satisfactory results – in turn disappointing clients and turning away potential long-term business.
By staying ahead in areas like inventory management, demand forecasting, cash flow management, order management, and supplier management, businesses can not only meet customer expectations but thrive during peak seasons. Read on to learn more about each skill and how it contributes to your business success.
Inventory management is more than just tracking stock levels – it’s about making sure you have the right supplies in the right quantities at the right time. For companies in manufacturing and production, it means managing inventory from raw materials to finished products. For retail, food services, and other inventory-intensive industries, it generally refers to the efficient storage, restocking, and selling of goods and services.
There are so many sophisticated tools in the market to track inventory levels in real time, and just as many inventory management methods. The key to efficient inventory management is to find the best method that works for your business, in order to avoid waste and reduce costs. There are some of the most common:
Finding the best inventory method for your business depends on several factors, including your industry, product type, and sales volume. Start by analyzing your business needs. Do you deal with perishable goods, seasonal items, or high-demand products? FIFO may help manage costs and prevent outdated inventory, while JIT can minimize holding costs for businesses that need flexibility. Afterwards, look at your cash flow, supply chain reliability, and customer demand patterns. For instance, JIT may not work for your business if delayed shipments are common. If your business has several flagship products, ABC analysis may be your best option.
Your inventory metrics should inform you if your inventory management method is working. Your stockouts rates and dead stock should be reduced; inventory turnover rate, which measures how quickly stock is sold and replaced, should go up. Days Sales of Inventory (DSI) measures how long your stock sits before being sold; a lower DSI reflects better cash flow and quicker sales cycles. Finally, metrics like order accuracy and carrying costs ensure that your method is not only meeting demand but also minimizing excess stock and storage costs.
One of the most important aspects of inventory management during peak season is demand forecasting. If you can accurately predict what products will be in high demand at a future point in time, you can prepare your inventory accordingly – preventing stockouts or over-ordering.
During peak season, consumer behavior can be more erratic than usual. For the most accurate demand forecasting outcomes, pay attention to the following information:
Demand forecasting can be as simple as looking at historical data to predict which stock you’ll need the most, or as complicated as factoring in market trends, market research, and long-term sales projections. Aligning your inventory management strategy with a solid demand forecasting strategy ensures that you always have enough stock to meet customer expectations without wasting resources.
While demand forecasting helps ensure you have enough inventory, cash flow management ensures you can afford to stock that inventory. For your business to thrive during the peak season, you need a clear picture of your cash flow and financing needs.
Effective cash flow management is critical in preventing businesses from running out of funds before they can fulfill orders. If businesses overextend themselves with too much inventory, they risk depleting their cash reserves – leaving them unable to cover operational costs like payroll, marketing, or shipping. In turn, if businesses come up short on accounts receivables, they may not have enough cash on hand to order more inventory to meet demand.
Here are some cash flow management tips to better support inventory management:
Peak season means dealing with multiple orders and projects at once, which can be overwhelming without a proper order management system in place. Order management is the process of tracking and fulfilling customer orders from purchase to delivery, ensuring efficiency and accuracy.
An automated order management system can help simplify this process, reduce human errors, and streamline inventory management. With the right order management tools, businesses can ensure seamless coordination between sales, warehouse, and logistics, allowing for faster fulfillment and fewer mistakes.
Some best practices for order management during peak season:
Supplier management is the process of overseeing and optimizing relationships with suppliers to ensure timely deliveries, maintain quality standards, and manage costs efficiently, ultimately supporting business operations and supply chain effectiveness.
During peak seasons, your suppliers may be stretched thin – leading to delayed deliveries, out-of-stock raw materials, and miscommunications. Having a strong supply chain, and a strong relationship with your suppliers, ensures that your inventory replenishment is efficient and reliable, giving your business the ability to meet demand without disruptions.
Some more tips for effective supplier management:
In relation to the latter, businesses can benefit from bulk ordering inventory by negotiating a higher discount from suppliers. By ordering larger quantities of stock in advance, you can reduce your cost per unit and increase your profit margins even more during peak seasons.
Not only does bulk ordering help with cost reduction, but it also ensures that businesses have enough inventory to meet increased demand without the risk of running out of stock. However, bulk ordering requires careful cash flow management, as large upfront payments may be necessary.
To make bulk ordering work for your business:
As peak season approaches, businesses may struggle with the capital needed to keep their inventory levels high. This is where flexible financing solutions, such as a revolving credit line, come into play. By having access to immediate capital, businesses can purchase the necessary raw materials and inventory to fulfill orders without cash flow disruptions.
With a revolving credit line, businesses have a safety net for funding inventory purchases, warehouse expansions, and logistics costs. This allows them to handle multiple orders and projects simultaneously without the fear of running out of resources.
How a revolving credit line supports inventory management:
Holiday economics refers to the Republic Act 9492, the Philippine government policy introduced by former president Gloria Macapagal-Arroyo, which allows the observance of certain public holidays to be moved to the nearest weekend – translating, in theory, to longer weekends and more domestic tourism.
In recent years, Philippine holidays that fall mid-week have been frequently moved to the weekend due to ‘holiday economics’ – sometimes in as short as two or three days’ notice. Aside from the usual peak season holidays like Christmas and New Year, these unexpected long weekends can also cause an increase in demand. If not managed properly, they can strain resources and create supply chain bottlenecks.
Anticipating holiday-driven fluctuations in supply and demand can help businesses optimize inventory management. For example, during a long weekend, certain products may sell faster than others and suppliers may take longer to fulfill orders. A solid understanding of holiday economics can help you avoid common pitfalls like late shipments or stockouts.
Some best practices regarding holiday economics and its influence on inventory management:
Effective inventory management is the cornerstone of a successful peak season. By combining demand forecasting, cash flow management, order management, holiday economics, and strong supplier relationships, businesses can ensure they are well-prepared to meet the challenges of increased demand.
As you prepare your business for the busy peak season, having flexible access to funds is crucial to meeting increased demand. First Circle’s Revolving Credit Line offers the perfect solution, giving you access to funds when you need them most. Best of all, you only pay when you use the credit line – it’s free to open and maintain otherwise.
With quick approvals, no collateral required, and low barriers to eligibility, you can access up to ₱20 million with interest rates as low as 0.99% per month. Plus, your credit line’s interest rate is reassessed annually, potentially offering lower rates based on your business’s performance.
Don’t let financial limitations hold you back this peak season. Sign up for a First Circle Revolving Credit Line today and keep your business ready to grow. Apply now and get approved in as fast as 2 business days.
