All About Clio Journal

When to Use a Seasonal Inventory Demand Forecast

Jan 8

Inventory management processes can be difficult to master, especially regarding seasonally forecasted demand. The demand for a product is constant year after year until suddenly, the demand increases or decreases without warning. Each year, the situation remains the same. This is where inventory forecasting management comes in quite handy. 

How does seasonal demand forecasting work? 

Inventory teams utilize seasonal demand forecasting to identify peaks and troughs in demand during certain seasons. There is a sharp increase in demand for classic gift items before Christmas, but it will slow down soon after the holiday. Business owners often know of seasonal fluctuations but can be more challenging when managing them. Not being considered early in the ordering cycle can greatly affect seasonal demands. 

But how can business owners cope up with supply chain demand? Well, there is some inventory management software that can forecast their inventory. A business owner will be notified which product is getting out of stock and requires more supply in advance. 

What are the benefits of seasonal demand forecasting?

For almost any industry, seasonality can be a major challenge. Christmas and Black Friday, when people purchase more, are examples of events and traditions that drive consumer buying behavior. There can also be an external cause, such as increased garden furniture sales during spring.

Seasonal management demands a delicate balance to manage demand. A short seasonal burst can represent more than half of a company's annual sales. It is vital for this period that accurate stock levels are forecasted. Having the right stock available to meet increased demand and avoid losing sales is obvious when a large percentage of your sales come from seasonal peaks. Having too much inventory can put you in a position of having excess stock when the peak period passes.

How does a company need to address seasonal demand on different levels? 

Managing seasonal demand requires the following skills:

  1. The seasonality of demand affects which products
  2. Knowing when the peaks will occur is important
  3. Identify and predict the rise in demand relative to normal demand
  4. Know that those forecasted peaks are subject to an element of uncertainty.

When your inventory is optimized proactively, you can prepare for seasonal increases. Stock levels will meet seasonal demand while incrementally increasing safety stock to account for forecast uncertainties.

When dealing with these four aspects of seasonal demand, what are the usual challenges companies encounter?

It will be difficult to produce accurate data with the wrong tools, especially if you have a large product range in your inventory. Utilizing inventory forecasting software, such as Inventooly, can speed up the calculation process. This allows you to focus on analyzing the data and making informed decisions.

Types of Seasonal Products

There are four specific categories of seasonal products:

  • Holidays. Christmas season inventory is a large part of seasonal inventory, which is no surprise. October, for instance, is a time when retailers open Halloween-themed aisles. Thanksgiving, Easter, and Christmas will also increase demand for products related to these holidays.
  • Fashion. The fast fashion industry constantly adapts to seasonal changes in clothing items. Depending on the season and the weather, different clothing can be required. It can also be based on the constantly changing fashion trends.
  • Recreation. Recreational activities also cause drastic sales increases during different seasons of the year. Several summer products are likely to become more in demand, such as swimwear, sandals, sun lotion, grills, tents, and sports equipment. Wintertime will see a significant increase in snow gear, shovels, and sled sales.
  • Back to school. Due to the millions of children returning to school this month, school-related products will naturally be in high demand. During this period, items such as uniforms, school books, schoolbags, and stationery will experience a huge sales boom.

Manage seasonal products with these five tips

  • Organize inventory stock by category

Categorizing inventory stock would be a good place to start. Seasonal goods, such as Halloween decorations, have limited demand but can be sold throughout. While perennial goods, such as roses, can increase demand throughout the year.

Businesses must set up proper inventory control to avoid excess inventory of seasonal goods.

  • Improve the accuracy of forecasts

Inventory control is complicated when forecasting demand, especially when it comes to seasonal variations. Business analysts can study historical data, seasonal patterns, and variations to identify sales patterns that occur every year. We can then use this information to set minimum stock levels for different seasonally relevant stocks.

Using forecasting software increases forecast accuracy most effectively and least labor-intensively. POS data will be collected directly from the POS system, and various calculations can be made instantly, eliminating any room for human error.

  • Calculate the seasonal demand timeline

It is important to identify the length of these peak seasons when planning for seasonal demand. Shorter peak seasons will require ordering in advance, while longer seasons will require multiple restocks.

  • Calculate lead times for products

A lead time is measured from the time an order is placed to the time when the final product is delivered. Buying decisions and seasonal inventory reorder points are influenced by these lead times. An organization will have to order seasonal products earlier if the lead time is longer. Business sales seasons could be accelerated by reducing lead times.

  • Flexibility is key

To ensure that the forecasts made for the next year are even more accurate, businesses should continue to review the accuracy of their seasonal demand forecasts. Companies may want to offer discounts near the end of peak season to prevent excess inventory and dead stock. This is done when a certain seasonal store fails to move as quickly as expected. 

What impact does forecasting seasonal demand have on suppliers?

Businesses must prepare their suppliers for seasonal variations in demand. Any increase in your orders must be communicated to your suppliers in advance, so they have time to meet your requirements. Often, an increase in a big order will take more than one standard lead time to process. It requires time for suppliers to respond.

It can be very helpful to provide an estimated number of orders that take into account the seasonality of your business. Show a supplier your plans for the entire year upfront, and create an action plan to address any challenges and get the stock you need as soon as possible. 


Due to the urgent demands of customers and their reduced tolerance for out-of-stock items, it is important to forecast the seasonal market correctly. This is essential so that organizations can remain competitive both online and offline. As well as seasonal demand projections, suppliers will be pushed to deliver the best lead times by preparing seasonal demand projections. 

By using Inventooly, a company can predict its seasonal demand for spare parts. You can calculate forecasts for all units within a given group by aggregating seasonal factors. You can calculate an individual profile and adjust your forecast if any products do not fall into a seasonal group.