Q4 is always the busiest period of the year for the majority of businesses. Typically, this is when consumer demand for products and services reaches a yearly high, meaning companies are looking to make more sales than ever. It’s a particularly busy period for inventory businesses with physical products to sell – but this also creates potential stock challenges.
Normally, managing your inventory/stock is fairly easy throughout the rest of the year because things stay reasonably consistent. With the increased demand and attention that happens during Q4, you can run into problems that may cost your business profits if not addressed ahead of time. As businesses prepare for the busiest part of the year, here are the core inventory challenges they should be aware of.
Running Out of Popular Items
One of the biggest issues facing businesses over the busiest time of year is running out of the most popular items. With little to sell, it can be very detrimental to businesses and feel like a wasted opportunity to sell more if they’re unable to keep up with demand. Even a product that usually sells fairly steadily can have a sudden rise in demand if there have been any promotions, sales or gains in social media exposure.
The issue isn’t necessarily that the business failed to buy enough stock, but instead based its purchasing decisions on normal sale information, failing to account for any seasonal spikes or social media trends. Businesses should compare what has sold well in years prior as well as take note of any relevant trends that seem to be catching on, relevant to anything they sell. That way they can better understand what is expected to do well and plan ahead to try and avoid sellouts.
Ordering Too Much Stock
This is the complete opposite problem to running out of stock: having too much of it. Obviously, businesses never ideally want to run out of products, but that shouldn’t mean ordering enormous quantities in case things do sell out. It just creates a lot more issues to deal with, like how costly it is to buy (especially large orders), where to store it all and money getting tied up in stock that isn’t selling – a potentially huge financial mistake.
This is all particularly problematic if the stock the business overbuys is seasonal. It’s great that there’s plenty to sell in the short term, but after the season is over, there’s potentially plenty of stock left over that hasn’t sold, and will not because it’s no longer relevant to customers. The business is then left with money tied up in products it can’t shift. Even selling at a discount doesn’t help as it just eats into the margins of profit.
Instead, it should be about balance; too little stock means the business loses out on potential sales whilst too much can result in unsellable inventory.
Incorrect Stock Information
A lot of businesses will use separate pieces of software to manage inventory levels. Cin7 is perhaps the most popular inventory management software out there, and it relays information about stock levels between the warehouse itself and the company’s website. Already, if you’re not using software like this, then it’s too easy to end up with inaccurate stock information that tells you items are still in stock when they’re not.
But the bigger issue revolves around how software like Cin7 interacts with other software systems in your business. As explained by Fiskal Finance, proper Cin7 implementation allows businesses to connect stock with bookkeeping systems and other aspects of their company. It means that the correct stock levels are seen by everyone, reducing what’s known as inventory discrepancies.
To ensure that the right inventory is displayed to both customers and people within the business, you need full integration, so your inventory management software works with everything else you use.
Delays From Suppliers
Businesses need to think not only about the stock in their warehouse, but how quickly they are able to replenish it. It’s not just the busiest time of the year for retailers; suppliers too are put under immense pressure to meet the demand of customers. During busy times business should expect to experience delays in getting stock replenished.
It’s not only the manufacturers making the products; businesses need to be wary of delays – shipping and customs can also cause delays in receiving products. Even if a business already has a fairly solid replenishment strategy year-round, changes will have to be made to adjust to demand and delays. A manufacturer might need 6 weeks to deliver rather than 3 during peak season, so businesses must be aware they need to order ahead of time, earlier than they usually would, to make sure they stay stocked up.
Predicting What Will Be Popular
Predicting what will be popular each year with customers isn’t a given. There might be products businesses expect to do well that don’t and products that aren’t expected to do well that end up selling out. Businesses will look at historical sales data to make decisions about what to stock up on and not to bother with, but that can be risky. Just because a product did well one year does not guarantee it will perform well the next.
Customer behaviour is always shifting as does so more often than ever thanks to social media virality. What’s popular one year often isn’t the year after; the trend has been and gone, and people get bored. Businesses have to try to stay on top of this so they can stay on top of the current trends and benefit from them. Behaviours also change because of economic conditions. When there’s a cost of living crisis and people are struggling more, they save more and will opt to buy things that are cheaper or more of a necessity.
Using a combination of historical data as well as current economical and social information can be useful to businesses to help them to forecast demand and predict what inventory they should focus on, rather than solely relying on past sales to make decisions about stock.
Managing a business’s inventory can have its challenges. Enough stock is needed to take advantage of the rise in demand without buying too much so that they are unable to sell it and get stuck with unsellable, costly inventory. Successful inventory planning is all about balance, correct information and staying on top of current trends whilst avoiding any shortages and supplier delays. The more on top of the potential foreseeable issues a business is, the fewer challenges with its inventory it’ll face, leading to a strong and successful Q4 period.
