Candy and Snacks

Staying Ahead of Holiday Allocation Issues as a Candy and Snacks Brand

The candy and snacks category is probably the most challenging category in the supply chain, perhaps second only to floral. The immense complexity of seasonality, temperature control, expiration dates, holiday packaging and event displays can cause even the best-oiled team to falter. “Fighting the fire” after an issue is identified can result in rushed and sloppy allocation decisions. By the time action is taken, it may already be too late. A proactive strategy for allocation can help candy and snacks brands stay ahead of holiday out-of-stocks.

The holiday challenge for candy and snacks brands

Planning for a holiday as a candy or snack brand is a multi-month operation involving just about every department. Perhaps you have a deal with Target for a Superbowl display, or maybe Amazon will be offering special-packaged bags of your candy for Halloween. Whatever the event or holiday, you need to calculate when, how and how much needs to be sent where – and you need to keep track of all your different DPCIs, ASINs, SKUs or other product identifiers at the same time. Marketing, sales and merchandising will need to coordinate with manufacturers as well as the retailer in question and account teams and planners will need to formulate a plan to meet demand.

Lead times from the manufacturer are calculated and shipping times to the retailer’s DCs are factored in even before the final leg of the journey to the store. Traditionally, your visibility ends at sell-in, going dark when the product leaves the truck at the DC. That is, until a new PO is placed by the retailer.

With holiday and event-specific items, supplementary POs can cause chaos for a brand. Usually order quantities are carefully planned ahead of time. If 1,000 cases have been set to ship to Target, and Target orders an additional 200 cases 2 weeks into go-live, it’s likely that order won’t be fulfilled. And if it is fulfilled, it might not arrive in time, resulting in costly buy-backs once the holiday has passed.

What a brand needs is to be able to anticipate that additional order even before the retailer notices they are running low.

Shipment recommendations to get ahead of allocation issues

Trying to forecast for a traditional item is difficult at the best of times. Add in the complexities of the holiday season and the margins for error become almost non-existent. Manually calculating a demand plan for these special candy and snacks items will likely result in oversights, or even more likely, won’t be agile enough to get ahead of errors before they occur. It’s simply too labor-intensive.

Candy and snacks brands dealing with holiday items need a complete plan that can be updated dynamically as new information is gained at the POS. In other words, you need to anticipate the supplemental POs your retailers will likely place because of a spike in sales even before they themselves notice. With this information at hand, you can go back to your retailer and pre-empt their PO with your own recommendation based on inventory availability, or you can be prepared to allocate what you can when the PO comes through.

Calculating a shipment recommendation (how much to ship to prevent out-of-stocks) requires an understanding of these variables:

  • Current in-channel inventory
  • Inventory available to ship
  • Lead times
  • Historical sales data and inventory positions
  • Current demand trends based on POS data

While it is technically possible to manually create formulas and statistical models for each of your SKUs in Excel or with a BI tool, software that is custom-built for consumer product brands will drastically streamline the entire process. Alloy Planning, for example, is a connected planning and execution platform that will automatically calculate a shipment recommendation based on these parameters and more. A brand can then execute upon the recommendation, getting ahead of holiday allocation issues by anticipating what the retailer will need to stay in-stock without having too many leftovers.

Alloy Planning serves as the single source for all relevant planning inputs to build transparency, confidence and trust across teams to align on the best possible demand and inventory plans. With Alloy, planners are freed from manual, low-value tasks so they can focus on the areas that drive the biggest business impact. Sales teams can improve Collaborative Planning, Forecasting and Replenishment (CPFR) by proactively partnering with retailers on replenishment plans. This helps brands get closer to inventory equalling demand while simultaneously driving revenue and preventing lost sales.

It’s up to a brand to accurately forecast and fulfill orders to the retailer. The better their on-shelf availability and ability to anticipate the need for additional supply, the more trust a brand can build with its retailers. Not only do you stay in stock, sell more items and reduce buy-back costs, you can foster a relationship to grow shelf space and your assortment to continually improve your business.

Learn how Ferrero handled their ‘first’ Halloween after acquiring Nestlé USA’s chocolate brands with the help of Alloy Intelligence. This article features a story on how Ferrero was able to make real-time adjustments to help plan for the unknown.

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