24 April 2023 The world of business requires attention, adaptation to new scenarios, proactivity, and a constant strategic vision. It is quite common for logistics managers, for example, to face many challenges throughout their professional lives that involve unforeseen events that can directly affect inventory, compromising the full functioning of the supply chain. One of the most recent and memorable unforeseen events experienced by companies worldwide was Covid-19. The pandemic had profound impacts on the supply chain on a global scale. Initially, right after the alarm about the growing number of disease cases, we observed queues of consumers in markets in various countries in search of toilet paper, pasta, cleaning products, canned food, among other supplies, with the aim of creating a “survival bunker” in their homes should quarantine and/or total isolation be necessary. This event known as Panic Buying, that is, purchases motivated by panic, disrupted the headlines of countless companies that found themselves having to adapt to a new scenario that was emerging and that, as we know, would last a few months. In addition to major health, economic, political crises, and natural disasters, which can lead to unforeseen events for companies, we also have the digital effect. In a world increasingly accustomed to the Internet, social networks, and influencers, the “boom” in access and demand for certain products can push managers to face their inventory logistics unexpectedly. So, whether you are a traditional or electronic commerce retailer, a wholesaler, or a logistics manager in various sectors, one thing is certain: you must be prepared to manage inventory in situations of variable demand. Below we will share with you some of the main ways to manage your inventory and prepare it for unforeseen moments. The great challenge of variable demand You have previously seen that there are several factors that can generate variable demand for your company, that is, cause market demand fluctuations and make the search for a particular product high. A television announcement is made, and this can trigger panic among the population; a war breaks out, and security products can be the most sought after for hours; A digital influencer mentions a particular product to their thousands of followers, and it is automatically sought by people in a matter of seconds. All this can disrupt inventory logistics planning and create a series of challenges for the supply chain. Not to mention the periods of seasonality that, in a sense, are already anticipated throughout the year, such as seasonal changes, commemorative dates, holidays, etc. The fact is that demand variations are common situations in almost all types of businesses, hence the importance of developing smart solutions to manage them skillfully. Having a good strategy allows you to control the situation, favoring consumer safety, increasing the profit margin provided by the market opportunity, remaining competitive, as well as ensuring a great relationship with your customers. 7 ways to manage variable demand in the supply chain Below, we have selected seven tips that will help you manage variable demand, ensuring you have the ideal amount of stock or even the conditions to face unforeseen fluctuations. 1. Have a safety stock The main goal of safety stocks is to ensure that a specific item is not missing from your stock, guaranteeing your customer will receive the requested products, even in the event of setbacks. Some companies, however, have adopted the main strategy of not having minimum safety stocks. This choice, although it appears economical and reduces storage costs, can cause your stocks to remain empty in unforeseen circumstances, creating internal bottlenecks. Therefore, the ideal is to keep at least a minimum of items in stock. To define this quantity, it is necessary to consider some important variables, such as sales history, supplier lead time, and future sales forecasts (demand forecast calculations). Today, with technological advancements and new management tools that facilitate daily life in supply chains, such as WMS, it is possible to maintain safety stocks predictably and in real-time, meaning logistics managers can monitor the ideal quantity of products that should be restocked as a precaution. All this without running the risk of excess stock. In this way, the company can meet variable demand quickly and efficiently. 2. Invest in demand predictability Demand predictability is a very important variable for achieving excellence in inventory management. It helps in countless decision-making processes, such as requesting new products, defining the desired stock quantity, understanding customer behavior, as well as other essential information for periods of variable demand. Inventory management systems are great allies in optimizing this phase. In general, they work interconnected with all the software in your supply chain and provide real-time decisive and historical production and sales data, capable of predicting opportunities but also possible issues. 3. Diversify your suppliers In the world of finance, there is an essential premise: “never put all your eggs in one basket.” This way, you ensure that in the event of interest rate drops or stock declines, you will not suffer serious consequences and lose a lot of money. In logistics management, it is no different: imagine if your only supplier encounters an internal problem and is unable to deliver to your warehouse? Yes, this would generate huge internal problems for your supply chain. In times of variable demand, having diversified suppliers allows you to negotiate delivery agility and increase the production of sought-after products. In this way, you can obtain a greater variety of deadlines and different operational suppliers, without having to pause your operations or leave customers without the desired goods. 4. Distribute your inventory Does your company have different operational locations? In this case, a great alternative to manage variable demand is to divide as much stock as possible based on service and operational area. In some cases, variable demand may occur in different locations, meaning, having a high product demand, it is possible to better control stocks by area and meet needs in very short times, being able to transfer products from one stock to another and maintaining supply chain efficiency. 5. Diversify sales channels Just as it is important to distribute inventory, offering customers a variety of sales channels can help manage variable demand. Once demand drops in the physical store and you have other sales means, you can create promotions and offers on other items, in order to free up warehouse space. Additionally, when you have multiple sales channels and are monitored by an efficient management system, such as OMS, it is possible to gather data that helps predict purchases and products, as well as understand consumer buying behavior. 6. Review strategies and emergency plans When was the last time you reviewed your supply chain strategies and revisited your business emergency plans? Logistics managers neither expect nor desire unforeseen events, of course, but these must be frequent topics in action and strategy planning. Therefore, when possible, gather information, identify opportunities, and implement strategies capable of making your operations and workflows more streamlined and secure. This action can facilitate how your company responds to demand variability, avoiding problems for the entire supply chain and, above all, maintaining market competitiveness. 7. Invest in a WMS system The WMS (Warehouse Management System) technology is nothing more than a system capable of managing your logistics chain, with the aim of optimizing inventory management for industries, wholesalers, retailers, and e-commerce in various market sectors. The software plays a fundamental role in enabling demand predictability and monitoring operational information throughout the entire logistics chain in real-time. Furthermore, the WMS is essential for creating timely alerts based on demand variability, notifying stock levels, controlling and monitoring orders, identifying problems, and even indicating solutions that help managers make decisions. With WMS, your company gains greater control and the possibility to reduce and optimize stock levels, especially safety, improves inventory space utilization, reducing costs, efficiently distributes operational functions, saving time and resources, increases speed and productivity, as well as unifying all business information, favoring the security and efficiency of logistical processes. Investing in the software is therefore an effective way to increase control and have the ideal tools and data to manage demand variations. Be ready to efficiently manage variable demand ‍Managing variable demand can be quite challenging. Failing to execute management strategies in times of uncertainty can lead the chain to accumulate problems and losses, both financial and reputational. However, small changes in management and warehouse organization can prevent shortages and stockouts and ensure the profitability and success of your business. Start by putting into practice the tips we have presented to you and keep in mind that technology is your great ally for efficient management. Discover our WMS and OMS solutions and find out how they can help you with efficient monitoring and better use of your resources. How to Manage Your Inventory to Meet Evolving Demand? Deagor WMS per ecommerce può aiutarti!