As we approach midsummer, it seems strange to be talking about Christmas, but if you haven’t already started planning for Christmas demand, you may already be late.
Planning your production in advance will be even more important this year. With supply chains stretched for various reasons, from lack of logistics to rampant cost increases forcing suppliers to reduce the amount of stock they can afford to carry, planning cannot start early enough.
Here are some simple actions businesses can take right now to help minimise the risk of lost sales in what should be one of the most positive and profitable times of the year.
Look back at sales totals for the last couple of “sensible” years, ie pre pandemic. Record the volumes - Write down which customers you know can rely on for orders, give them a call to see if they can confirm (a PO is always nice). Then the ones you think you can rely on and call them too, then compare these to previous years and forecast what the balance might be?
Now you have a reasonable view of your anticipated sales. Hopefully you can now predict some of Christmas. But what about those “opportunity” sales for Christmas? Perhaps a ‘top, middle and bottom’ prediction of what else might come through will help shape your production, sales and working capital forecasts?
Talk to your suppliers as well - particularly packaging or ingredients to see what they forecast for you. Did you end up placing any last minute orders for packaging or ingredients to meet additional Christmas orders? This information might help you with forecasting demand for this year.
When do I need to start producing in order to meet demand? This has implications for working capital; on one hand if you have capacity constraints then being able to forecast and produce to stock means you have used resource well. On the other, you may have tied up valuable working capital
Cashflow – do one and then review the terms customers have in case you can improve your working capital position. Can you reduce your debtor days to get cash in quicker and fund increased production runs?
Do you know your gross-margins on Christmas sales? Should you review prices?
Lead times for printed packaging and corrugated boxes have extended considerably. Check with your supplier and place forward orders accordingly
Consider what the shelf life will be of stock remaining if you don’t sell it all during the Christmas period. What are your options?
It’s unlikely that you will be able to forecast demand perfectly but don’t just sit back and wait for orders to roll in. As the old adage goes Prior Planning Prevents Poor Performance