July 9, 2024
Mike Le

Seasonal vs. Evergreen Inventory Planning: Key Differences

Have you ever wondered what the difference is between seasonal and evergreen inventory planning, you're in the right place. We'll break things down with straightforward examples and practical recommendations.

Seasonal vs. Evergreen Inventory Planning: Key Differences

Seasonal vs Evergreen Planning

Seasonal inventory planning is all about controlling stock for products that are in high demand at certain periods of year. Consider industries like fashion, retail, and anything holiday-related. To fulfill seasonal demand, these enterprises must be proactive and plan well ahead.

Evergreen inventory planning is slightly different. It focuses on things that customers want all year long. This strategy is typical in businesses like food and beverage, where certain things are constantly in demand, regardless of the season.

Let's discuss fashion. Brands like Miz Mooz start preparing their spring and winter collections roughly a year in advance. For instance, they may start creating their spring 2025 collection in March 2024. By June or July, they are accepting wholesale orders to guarantee that stores are ready for the season. This type of schedule allows them to balance production and demand, ensuring that they do not have too much or too little stock.

For instance in the food and beverage industry, Canned foods, snacks, and beverages are continuously in demand. Companies in this industry regularly plan their inventory, taking into account lead times and stock levels. When supplies run low, they simply place new orders to replenish the shelves.

Time Frame and Planning Differences

The primary distinction between seasonal and evergreen planning is the timeframe. Seasonal planning necessitates thinking far ahead, perhaps a year or more. Fashion brands, for example, actively monitor the fashion calendar, projecting trends and consumer preferences well before the season begins.

Evergreen planning, on the other hand, focuses on staying ahead of current demand. It is all about tracking sales patterns and adjusting promptly to ensure that things are constantly available.

Because demand is consistent year-round, firms may avoid the hassle of long-term forecasting. Instead, they prioritize maintaining stock levels depending on current sales. When inventory runs short, they place new orders, ensuring that there is always enough merchandise to fulfill demand.

Miz Mooz: A Fashion Brand

Like when Miz Mooz starts planning new collections approximately a year in advance, promote in March, and get wholesale orders in June and July. This timetable allows them to successfully manage inventory and meet seasonal demand peaks.

Large purchase orders during seasonal peaks might be problematic. Buying too little can lead to stockouts, while purchasing too much can result in surplus inventory. To prevent these challenges, several businesses break their seasons into three stages: pre-season, during-season, and post-season. This helps to distribute inventory management throughout time.

Coca-Cola: Food & Beverages Business

In the food and beverage industry, products like Coca-Cola are always in demand. Coca-Cola uses evergreen inventory planning to make sure their delicious beverages are always available to consumers. The company is constantly planning its inventory, considering lead times and stock levels. When supplies run low, they simply place new orders to replenish the shelves, keeping a steady supply throughout the year. This way, no matter when you crave a refreshing Coke, you can always find one!

Goals and Strategies for Seasonal Inventory

When it comes to seasonal inventory, the goal is to minimize the risks of overbuying or underbuying. Here are some strategies that go beyond the basics:

  1. Collaborative Planning, Forecasting, and Replenishment (CPFR): Work closely with suppliers and retailers to share sales data and forecasts. This collaboration helps in aligning production schedules and inventory levels more accurately with actual market demand.
  2. Advanced Demand Sensing: Use advanced analytics and demand sensing technologies to adjust forecasts based on real-time data. This can include social media trends, weather forecasts, and economic indicators that might affect consumer behavior.
  3. Flexible Supply Chain: Develop a flexible supply chain that can quickly adapt to changes in demand. This might involve having backup suppliers or using local manufacturers who can provide faster turnaround times.
  4. Inventory Buffering: Create buffer stocks for critical items. This safety stock can help mitigate the risk of stockouts during unexpected demand spikes.

Goals and Strategies for Evergreen Inventory

For evergreen inventory, the aim is to keep best-selling products consistently in stock without overcommitting resources. Here are some strategies:

  1. Just-in-Time (JIT) Inventory: Implement JIT inventory systems to reduce holding costs. By receiving goods only as they are needed, businesses can maintain lower inventory levels.
  2. Automated Replenishment Systems: Use automated systems that trigger reorders based on predefined stock levels. These systems can help maintain optimal inventory levels with minimal manual intervention.
  3. Vendor-Managed Inventory (VMI): Partner with suppliers who can manage inventory levels on behalf of the business. This can streamline the replenishment process and reduce the burden on internal resources.
  4. Demand Forecasting Tools: Utilize advanced demand forecasting tools that integrate sales data, market trends, and seasonal variations to provide more accurate predictions.

Either seasonal or evergreen inventory planning presents unique problems and rewards. Businesses may better meet customer demand and maintain optimal stock levels if they understand the variations and use the appropriate solutions for each.

At Conative, we offer both types of inventory planning, assisting brands in minimizing risks and increasing revenue. With our knowledge and resources, you can traverse the complexity of inventory management and remain ready to fulfill market demands.

Photo by Ivan Samkov: https://www.pexels.com/photo/employees-looking-at-documents-8117465/

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