The BBQ Button: Taking full advantage from peaks in demand
Unexpected demand during something like a sporting event or even an unseasonably hot day can have a huge impact on the buying behaviour of consumers. Take for instance BBQ meat or beer: both of these items see demand soar if the weather is nice or England make it beyond the group stages of the World Cup. As a retailer, you need to be able to respond to this. But how can you ensure you achieve the right stock levels to satisfy the demand? Meet the BBQ button!
To take full advantage of any sales opportunities, you must be able to react quickly. In the face of unforeseen events, such as "hot weather", buyers often have to make additional orders at random without any real insight into how the demand will develop.
Equally, there are some items where sales patterns can differ hugely at the start of the summer season compared with late August or September. Think about BBQ sauces: everyone rushes out to buy these products as soon as the first sunny weekend arrives. But by the end of the season, demand will have all but disappeared. The consequence is that what should have been a fantastic opportunity to profit ends up resulting in a vast amount of surplus cost at great cost to the business!
PUT YOUR REGULAR FORECAST IN THE BIN
How much do you have to order to satisfy the exact demand for a special event? You know how much you sell on an “average” day and you can "overlay" a seasonal demand pattern. However, when it comes to an exceptionally hot or cold day, you really have nothing to go with.
Although, we haven’t quite seen “BBQ weather”, As the temperature soared to a staggering 16 degrees in February this year, retailers no doubt some strange purchasing behavior. If summer comes earlier than expected and half the UK decides to get the BBQ out, supermarkets may as well throw their regular forecasts in the bin. After all, the demand for products like meat, lettuce and sauces would see a completely different dynamic.
THINK IN SCENARIOS
It is becoming increasingly difficult for retailers to ensure the right products are stocked on the shelves: customer demand is becoming more erratic, the number of (online) sales channels are increasing and the life cycles of products are becoming shorter. As an inventory manager, you can no longer rely on just a static plan. You have to learn how to think in scenarios.
Will it be nice weather? Will a new product impact demand? Is a competitor running a promotional? A planner needs to be responsive but this is impossible if they have to adjust the orders manually.
FINETUNING INVENTORY TO A SPECIFIC STORE OR REGION
At Slimstock, we have a lot of experience with companies that need to be able to react quickly to change. Our inventory management solution, Slim4, encompasses an 'events module' that enables supply chain teams to anticipate and plan for short-term events. Given that many food retailers have been using this scenario function successfully for a number of years, this is often informally known as the “BBQ button”.
Imagine that good weather is on the way. To prepare, a supermarket chain can build a daily demand profile in which right lift factors are automatically assigned to a specific group of BBQ-related items. Likewise, the opposite happens for items that are sold less in the event of good weather, such as minced meat or microwave meals. A distinction can also be made between the lift factors for products that are sold at the beginning of a BBQ period, such as sauces and charcoal, and articles that are bought fresh on the day, such as meat and salad. A planner can then fine-tune this to a region or store level and enter a start and end date to build a planning scenario.
BRING HARMONY TO THE PLANNING DEPARTMENT
With the 'events module' in Slim4, an incidental peak in demand is isolated within the forecast, based on proven scenarios. This ensures better availability - allowing a company to optimise inventory levels and, thus, prevent panic in the purchasing department.
Slim4 automatically converts new forecasts into daily orders, taking into account existing inventory levels and optimal order sizes. This not only brings peace to the ordering process, but it also ensures that buyers always order the right items.
Keep an eye on the weather and let your company benefit from any future sales opportunity with the BBQ button in Slim4. And the beauty is ... the functionality works just as well for other incidental sales opportunities such as festivals and sporting events.