DC Velocity - August 2019

BY BEN AMES, SENIOR NEWS EDITOR

INVENTORY MANAGEMENT
Technology

CONSUMERS MAY SEE JUNE AND JULY AS LAZY DAYS for swimming pools and backyard barbecues, but for retailers, it’s another story altogether. In the retail supply chain world, the summer months are the critical period when retailers ramp up for the peak holiday shopping season ahead.

In decades past, these preparations consumed the better part of a year. To stock their shelves by Thanksgiving, merchants placed orders with manufacturers many months beforehand, amassing large quantities of stock to ensure they wouldn’t be caught empty-handed when shoppers came flooding into their stores.

Over the past decade or so, however, retailers have been moving away from the traditional practice and pushing their ordering out until later and later in the year. Although that might sound risky, it’s actually smart business. By ordering later, they can be more responsive to real-time demand and reduce their risk of getting stuck with overstocks that eventually have to be sold off at a discount, explains Dan Gilmore, chief marketing officer at supply chain technology provider Softeon.

But now the pendulum may be swinging back again. Many are questioning whether the delayed-ordering approach will still be sound strategy in 2019, a year that has been roiled by market forces such as hot e-commerce growth, tight trucking capacity, a slowing economy, and tariff threats and trade wars. “There are more uncertainties than you would normally find, and that is causing some problems around how to manage peak-season inventory flow,” Gilmore says.

DEALING WITH THE DELUGE

All this presents enormous challenges for retail supply chain professionals. Even in the best of times, retail logistics leaders often struggle to find space to house all the inventory their companies accumulate in advance of peak season, says Norm Saenz, managing director at the supply chain consulting firm St. Onge Co. “Now, the tariffs are scaring everybody, and that is having major retailers thinking about scrambling to get their inventory in sooner than usual”—a move that is only exacerbating the space problem, he says.

In the face of these capacity constraints, retail distribution

As retailers prepare for the holiday shopping season, new inventory strategies and real-time data will be key to coping with the turbulent market forces of 2019.