Halloween’s almost here!
Really? Well, not for most consumers. But it is for supply chain professionals managing costumes, candy, questionable yard decorations and more. They have been thinking about Halloween for a while. Just as we all know that others have been thinking about Back-To-School inventory since May and still others are already planning for the holiday shopping season.
We think about these things way ahead of time because these seasonal inventory peaks often drive requirements beyond what is normally needed throughout the rest of the year. In addition to the normal flow of goods that may arrive from overseas, transported, divided up and moved again to distribution points across the country – peak goods often need to find a “space of their own”. Rather than flowing into the normal workflow, it often happens that a significant amount of inventory gets moved, built up and then, poof – is gone – all on its own unique schedule.
It’s no surprise. Last year the National Retail Federation reported that nearly 30% of consumers would start Halloween shopping as early as September! And while the shopping periods continue to expand, so do the gross numbers with more than 80% of consumers planning to spend as much or more than last year during the upcoming back-to-school period. If we look ahead to the major holiday season, eMarketer predicts sales to grow about 3.5% as it did last year when ecommerce outpaced that at 16% growth. The point is: sales peaks are growing, expanding and at the same time, we continue to see omnichannel trends become part of our reality.
These future spikes and trends create unique challenges for supply chain managers. Do they build warehousing distribution for physical or electronic sales? More acutely, do they build for peak volumes or for the average? Building for the peaks can leave a lot of unused space that costs money throughout the year. Building for the averages means a scramble to find extra space for those short periods of peak times. And even when we know a peak time is coming, there are always unexpected jumps in inventory, last-minute regional promotions or simply the management of heavy exchanges.
The good news is that the calculus that governs our peak-capacity vs. average-capacity is changing. On-demand warehousing – the process of securing space only when you need it, introduces a new flexible variable into the equation.
If you have chosen to build capacity for the peaks, on-demand warehousing is a method that allows you to make your extra space available to other organizations that need it when you have it to spare through a digital exchange. This has been described as the ability for any warehouse to become a 3PL. The approach can help offset costs, and even drive meaningful revenue, from warehouse space that would have otherwise sat vacant.
But perhaps you have chosen to build capacity for your yearly average needs instead. In this case, on-demand warehousing allows you to use that same exchange to secure temporary warehouse space from organizations that have it to spare. Considered part of the collaborative logistics movement, it eliminates the need for long-term leases or additional personnel. Simply make your space needs known and gain access to a huge network of warehousing partners that can serve those needs.
As supply chain professionals, we are always looking into the future and no matter how we have structured our warehouse capacity, seasonal peaks and dips simply happen. Yet, whether it’s upcoming back-to-school, Halloween or end-of-year holiday peak periods, on-demand warehousing can take the anxiety out of inventory swing unknowns.
Now, the only scary thing about Halloween should be figuring out what you are going to wear to the company costume party.