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 key skills, like inventory management and cash flow management, order management, and supplier management, businesses will not only meet customer expectations but thrive during peak seasons.
1. Inventory Management: For Mastering Demand and Reducing Waste
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.
There are so many sophisticated tools in the market to track inventory in real time, and just as many inventory management methods. Find the best method for your business to avoid waste and reduce costs. There are some of the most common:
ABC analysis. Splits goods into three categories to identify products that contribute the most and the least to your profit and inventory cost.
Just-in-time management (JIT). Timing supplier deliveries with your production schedule so you receive raw materials only as needed for the production process.
FIFO (First in, first out). Moving the oldest stock first to keep inventory fresh.
MOQ (Minimum order quantity). Ordering the smallest possible amount of inventory to keep costs low.
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.
2. Demand Forecasting: For Predicting Customer Needs
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. For the most accurate demand forecasting outcomes, pay attention to the following information:
• Previous peak season sales data, to help you identify customer trends;
• Current market conditions, to help you adjust inventory orders based on external factors, like competitors, new product announcements and the like; and,
• Pre-orders and other early indicators of demand.
Demand forecasting can be as simple as looking at historical data or as complicated as factoring in market trends 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.
3. Cash Flow Management: For Keeping Your Finances in Check
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.
Here are some cash flow management tips to better support inventory management:
• Understand your fixed and variable costs, and which of these can be expendable in the case of a cash flow gap.
• Maintain a healthy balance between incoming payments and outgoing costs by invoicing promptly and tracking payment terms closely.
• Practice year-round cash flow forecasting to predict potential seasonal cash flow problems and cash on hand in advance.
• Use a credit line to cover temporary gaps in cash flow without affecting long-term financial health.
4. Order Management: For Streamlining the Ordering Process
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.
Some best practices for order management during peak season are:
• Implement an order management system that integrates with your inventory management tools. An automated system can ensure seamless coordination between sales, warehouse, and logistics, allowing for faster fulfillment and fewer mistakes.
• Prioritize high-volume and high-value orders to ensure on-time delivery.
• Set clear expectations with customers about delivery times and keep them informed about their order status.
5. Supplier Management: For Reliable Inventory Replenishment
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. To avoid this, cultivate a good relationship with multiple suppliers so you have a network of reliable partners that can help you mitigate risks in case of supply chain disruptions.
Always establish clear communication with suppliers and discuss your projected demand ahead of time. Negotiating favorable terms and discounts should also be done ahead of time — especially if you need flexible delivery schedules and bulk orders.
As peak season approaches, you may struggle with the capital needed to keep your inventory levels high. This is where flexible financing solutions, like a credit line, come into play. Find a credit line that is free to open and requires no collateral so you have a standby safety net for funding inventory purchases, warehouse expansions, and logistics costs. This allows you to handle multiple orders and projects simultaneously without the fear of running out of resources.
Effective inventory management is the cornerstone of a successful peak season. When balanced with demand forecasting, cash flow management, order management, and strong supplier relationships, businesses can ensure they are well-prepared to meet the challenges of increased demand.
This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or MAP.
Benedict S. Carandang is a member of the MAP ICT Committee and the vice-president for External Relations of First Circle. This article was co-written with Jess Jacutan, content marketing consultant for First Circle, a fintech company that empowers SMEs through funding and free growth tools.