Executive Briefings

Holiday Planning Blues

It's time for retailers and consumer electronics manufacturers to solidify inventory plans for the 2009 holiday season, but the out-of-normal 2008 season and continued lack of visibility to consumer demand are making that job especially difficult this year.

"Retailers are still feeling the damage from the disappointing 2008 holiday season when many were stuck with excess inventory in the channel, which led to deep price discounting," says Bill McLennan, president-global operations at ModusLink, a leader in business process outsourcing solutions. One result, he says, is that retailers are reducing the number of brands they will carry coming into this holiday season and are reluctant to commit to forecasts. "Everyone is nervous about trying to predict what the U.S. consumer is going to do, especially with job losses continuing to increase," McLennan says.

To cope with this changing environment, consumer electronics manufacturers need to shift from a build-to-stock model to a build-to-order model, by adopting a postponement strategy, McLennan advises. "Positioning inventory closer to the point of demand and using a postponement model will allow companies to be more reactive and have a much shorter cycle for order fulfillment," he says. "They will be in better position to respond if demand is higher than anticipated.

"This is not a new strategy, nor is it one that is necessarily easy to execute, but given the current market, perhaps it deserves a fresh look. What do you think?

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It's time for retailers and consumer electronics manufacturers to solidify inventory plans for the 2009 holiday season, but the out-of-normal 2008 season and continued lack of visibility to consumer demand are making that job especially difficult this year.

"Retailers are still feeling the damage from the disappointing 2008 holiday season when many were stuck with excess inventory in the channel, which led to deep price discounting," says Bill McLennan, president-global operations at ModusLink, a leader in business process outsourcing solutions. One result, he says, is that retailers are reducing the number of brands they will carry coming into this holiday season and are reluctant to commit to forecasts. "Everyone is nervous about trying to predict what the U.S. consumer is going to do, especially with job losses continuing to increase," McLennan says.

To cope with this changing environment, consumer electronics manufacturers need to shift from a build-to-stock model to a build-to-order model, by adopting a postponement strategy, McLennan advises. "Positioning inventory closer to the point of demand and using a postponement model will allow companies to be more reactive and have a much shorter cycle for order fulfillment," he says. "They will be in better position to respond if demand is higher than anticipated.

"This is not a new strategy, nor is it one that is necessarily easy to execute, but given the current market, perhaps it deserves a fresh look. What do you think?

Comment on This Story