Retail Surgery: How can I make sure I don’t overstock for Christmas?

The simple answer is that your supply chain needs to work in real-time. This will help you remain agile and able to react to spikes in demand while stabilising stock levels over an extended period. Establishing a demand-driven supply chain is becoming easier with the range of technologies now available.

Average out-of-stock rates are about 8% during normal shopping periods but these can surge to 20% at peak times. Sales volumes during these peaks can be as much as five times greater so it is important to improve availability.

Craig Sears-Black, UK managing director of supply chain solutions provider Manhattan Associates, explains that while distribution centres are usually well stocked, the cause of out-of-stocks often lies in the “last 50 yards”. The further goods get from distribution centres, the harder it is to track them.

He says: “Visibility is crucial to making sure the fastest-selling products are re-ordered and replenished wherever demand is detected and you can balance, prioritise and streamline stock levels.”

Sears-Black recommends an “extended enterprise” approach, which, when combined with seasonal profiling, creates a demand-driven supply chain. The end result is replenishment cycles are shortened to align supply more closely to demand – and you’re not left with piles of reduced stock.

In the long term, this will help to manage future annual growth rates and to adapt to meet new business goals.