The festive season all across the world is a time of celebration and translates into increased sales for businesses, and heightened consumer demand coupled with even higher consumer expectations, for supply chain managers specifically. The surge in energy and excitement during this period puts immense pressure on the supply chain industry to meet customer expectations and optimize operations. Let’s explore two of the key aspects of supply chain management during the festive season, taking into account the post-pandemic VUCA environment that exists today.
Demand Forecasting: A crucial precursor
For the minuscule percentage of you that may wonder at the term, demand forecasting is the process of estimating future customer demand for products and services. Pretty simple, eh? It is easier said than done, especially while planning for the festive season.
For this period of a few months, accurate demand forecasting becomes especially crucial for supply chain managers to avoid stockouts and excess inventory – both of which can lead to considerable loss of capital/revenue and brand image. The spike in sales and the varied product preferences during festivals make it essential to predict demand patterns accurately.
Demand forecasting in a VUCA world
The pandemic made unprecedented changes to how the industry functions every day. But it also made the supply chain industry rise like a phoenix, helping supply chain leaders turn dreams into reality in a span of a few months. But in this post-pandemic VUCA world, several factors influence demand forecasting, and it has become a complex activity, especially when it comes to planning for the festive season. More so because there is no science that can really help us to define the exact number and that too with ultimate accuracy.
“The factor which can help us to come to a more accurate forecast is historical data. We should always have at least the last two or three years’ trend reports available which can help us understand what kind of demand can be expected in the present year. Apart from that, another important thing is how the seasonal sentiment for the current year compared to last year. The best approach to it is that we should take into account the last year’s number as well as put all the environmental factors into the planning part and based on that we can extrapolate the number. And based on that number, we will have to plan, we will have to give some tolerance for them,” says Mr. Samir Chaturvedi, Supply Chain Lead at Haldiram Snacks Pvt Ltd.
For brands like Haldiram Snacks, and also others which categorize in the HoReCa industry, demand forecasting is of utmost importance as it plays a critical role in their operational, tactical, and strategic decisions. With fast-growing competition and the penetration of service aggregators like Zomato, Swiggy, and Uber Eats, technology and innovation have become essential for maintaining top rank in the charts. By anchoring on data-driven forecasting models, Haldiram Snacks is able to better understand consumer preferences, identify demand catalysts, and adapt its strategies to meet changing market demands, ultimately ensuring its success.
Overall, supply chain managers need to take into account many highly dynamic factors into consideration, but now that we have the latest technology at the click of a button (quite literally!), leveraging tools that use artificial intelligence, machine learning, analytics, etc. can help analyze data and make more informed predictions amid the evolving landscape.
In totality, demand forecasting may not help you prevent an incident, however, it can surely help you be padded and prepared to handle the worst.
Warehousing Management: Meeting dynamic demands
Warehousing is one element of the supply chain industry in India that has been exhibiting a bullish trend for quite some time now, especially post the pandemic. With new logistics hubs sprucing up along the outskirts of cities and states, the demand for warehousing has been picking up.
In fact, a Savills India report says that in H1 FY23, the industrial and warehousing sector recorded a total absorption of 22.4 million sq.ft., indicating a 7% increase from H1 FY22.
The pandemic has accelerated the shift towards e-commerce, leading to an increased demand for efficient warehousing solutions. Therefore, supply chain managers must focus on optimizing warehouse space, implementing automation and robotics, and ensuring safety protocols for warehouse workers. And this becomes even more important when operating during the festive season, making flexible and adaptable warehousing strategies increasingly essential to meet the fluctuating demands.
Warehouse optimization plays a pivotal role in handling the festive rush as timely replenishment becomes the need of the hour. During peak time, efficient inventory management, well-planned layouts, and streamlined order picking are crucial for reducing lead times and meeting customer expectations.
Chaturvedi says, “I think this is one of the most crucial things with our sector specifically, where we have to store inventory as per the orders in advance. On that thought, flexible warehousing is becoming very famous in India, like very popular in India, it is one of the best alternatives in the present day and it really helps. Apart from that, we should always have at least some 20-30% extra space in our warehouse, which should be meant only for the buffer. These factors will surely help, so which will help us to build a stock.”
Flexible warehousing, also known as on-demand warehousing, is gaining traction in India as businesses seek agility in their supply chain operations. It involves leveraging temporary or shared warehouse spaces to accommodate fluctuating demands during peak seasons.
According to the example given by Chaturvedi, if Company-A experiences peak sales during summers and Company-B experiences peak sales during winter, both of them can opt for the operational area in the same flexible warehousing space. This flexible space can help both of them to take full advantage of their respective peak times while decreasing costs and increasing revenues. Companies can partner with third-party logistics providers offering flexible warehousing solutions to optimize costs and respond quickly to market changes.
The festive season in India brings both opportunities and challenges for the supply chain industry considering the vast demographics that flourish across topographies. Demand forecasting and warehouse optimization become paramount for supply chain managers to ensure adequate inventory levels and meet customer demands during this period of heightened consumption, especially as we navigate the complexities of the post-pandemic VUCA world, supply chain managers must adapt to changing market dynamics and leverage technology to make accurate predictions. By adopting proactive approaches, leveraging technology, and collaborating with reliable partners, the festive season can be navigated successfully, delighting customers and driving business growth.