Overcoming Black Friday inventory management challenges

Black Friday, 24 November, is one of the year’s biggest shopping days when physical stores and e-commerce tempt shoppers with their offers.

For the past ten years, Black Friday sales have increased annually, and it is one of the most important sales occasions of the year. The surrounding days are also seeing increased trading. Now, the whole week is called Black Week due to increased trading as the holiday shopping season, including Cyber Monday on 27 November, starts.

The extended Black Week sales period sees increased pressure on companies to get ahead on their demand planning and ensure they have the necessary inventory. This year, purchasing teams are also facing continued challenges due to global supply chain and logistics pressures, component shortages and soaring prices for electricity and fuel.

Successful sales during this period come down to many factors. Inventory, POS, shipping, web shops and accounting software must be able to keep up to avoid lost revenue and improve cash flow. The key is to start your strategic planning early, which involves using inventory data to inform purchasing processes.

We’ve summarised an essential guide and tips on ensuring you stock the right products during this busy sales period.

Tips for Black Friday inventory planning

In the run-up to Black Friday and Black Week, buyers and warehouse planners must invest in stocks that generate revenue without risking them becoming shelf warmers and increasing warehouse storage costs after the campaign period.

Analyse sales and make accurate demand forecast

The first step for good inventory planning is to use accurate demand forecasts. These should be based on previous Black Friday and Cyber Monday sales periods or other similar promotional periods that can help the analysis. Since the market constantly changes, it’s also important to consider qualitative data from your sales and marketing teams and customers.

The promotions also depend on external conditions, such as seasonal demand, market trends, economic conditions, and other trends that can cause unpredictable demand fluctuations.

One solution is to automate demand forecasts to avoid guessing how much inventory should be kept during the Black Friday sales period. With automated demand forecasting, all product demand is calculated dynamically based on statistical methods of demand forecasting. These are much more efficient, as they analyse historical demand patterns at the SKU level and subsequently assign the appropriate algorithm to calculate demand based on demand patterns per item.

Update stock levels in real-time

Compared to physical stores, e-commerce needs an attractive product range, particularly popular products, and a user-friendly platform and process that ensures orders are handled quickly, efficiently and correctly. Today’s customers are more demanding and expect product quantities displayed in the online store to match actual inventory levels.

This creates a need for systems that work in real time. Cancellations, reservations, and returns must also have a live impact on the inventory levels displayed in your systems. Ensuring you have the right amount of the right product at the right time to meet demand and delivery times requires a complete and continuous overview of your inventory.

Redistribute inventory between warehouses

It is common to have too many of some items in one warehouse and a shortage in another. While the simple solution is to order more stock from your suppliers, if you already have stock that isn’t needed in another location, it makes sense to use that first. During a considerable promotional period like Black Week, it can be extra important to ensure you can redistribute items to make the most of all warehouses and maintain healthy stock levels in all locations. This saves money on ordering new stock or paying for rush orders to beat lead times.

If you have a central warehouse that distributes items to smaller regional warehouses, be extra careful with your inventory distribution. Only send the items each warehouse needs instead of those they want; don’t assume they’ve requested the correct quantity. Creating forecasts for multiple warehouses can lead to unnecessary orders and too many items in stock. Instead, combine demand from all the spokes and create a central forecast, or produce separate forecasts for each spoke (which considers local adjustments) and aggregate the forecasts accordingly.

Keep track of lead times and increase visibility in the supply chain

During extensive sales periods, it’s likely multiple companies will demand the same goods from their suppliers, which can create longer lead times. As suppliers’ lead times increase, so does the risk of running out of stock or delaying delivery to your the end customer. One way to counteract this is to get complete insight into your suppliers’ lead times so you can continuously calculate and adjust order parameters to avoid delivery problems.

In the event of high demand for stock items, you also risk tension between customers and suppliers. An open dialogue about delivery capability is crucial to address supply chain bottlenecks and build a good relationship. Building that communication with suppliers requires reliable data, regular communication and transparency.

Reliable data allows you to give your suppliers better sales forecasts, which puts them in a better position to handle orders.

Inventory optimisation systems include dynamic lead-time features that help mitigate the effects of supply disruptions. The order parameters are automatically adjusted to ensure sufficient inventory levels cover upcoming demand. You can also set up order schedules in advance and compare suppliers based on lead times, unit prices and minimum order quantities. You can also get recommendations on which supplier can most cost-effectively deliver on time.

How inventory optimisation can help you meet Black Friday demand

At EazyStock, we do not believe it’s possible to “guess” your way to success. Inventory data should always guide purchasing decisions and provide control and confidence that the right items are in stock at the right time.

With a demand forecasting and purchasing optimisation tool, you can automatically optimise replenishment for the best inventory values and service levels.

One of the most essential tips for Black Friday, Black Week and Cyber Monday is to start your strategic planning in time! Don’t let the holiday shopping season sneak up on your, and wait until after the summer to begin ordering your inventory. With recent and continued supply chain disruptions, it’s never to early to start. Many companies start planning Black Friday inventory in the spring.

If you’ve left it too late this year, don’t worry. Contact us today so you can keep track of your stock levels and feel confident in your demand planning, ready to beat next year’s Black Friday inventory management challenges.