The doorbell rings. Two shadowy figures wait in silence, their breath a plume of mist on the air. The wind tugs at the ghost’s sheet, and flaps the devil’s cape. A tall figure approaches, its face hideously distorted by the dappled glass in the door. Slowly, the door edges open, and the craggy face of an elderly man peers out. “Trick or treat, Grandpa!” the children squeal, and he pulls the door wide open with a smile.
The tradition of trick or treating can be traced back to the Middle Ages, when poor people would go door to door on November 1st and sing prayers for the dead in exchange for food. Today, children visit neighbors in costume to ask for treats. Three-quarters of US households handed out treats for Halloween last year, and the most popular treat is chocolate. Those who don’t want to take part, or who hand out disappointing treats like apples or carrots, might face the threatened trick, which is typically a prank played on them or their property.
As well as being a huge cultural festival in many communities, Halloween is a fantastic opportunity for manufacturers and retailers. But will this Halloween bring a trick or a treat for you?
The supply chain for confectionery, as for any food product, needs to respect the perishable nature of the goods. But that problem intensifies around Halloween, because the best before date isn’t the only sale deadline. On November 1st, nobody is interested in spookily themed chocolates, costumes or decorations any more.
If you don’t manage your supply chain effectively, you can be haunted by these two nightmares:
- Oversupply: this causes significant losses as goods are discounted for a quick sale after Halloween. It also carries an opportunity cost, because space in the supply chain allocated to Halloween goods cannot be used for Christmas goods, which also begin to feed into shops around this time.
- Undersupply: if there is not enough stock, or if it can’t reach the right shops, companies miss sales and lose ground to their competitors.
The result of getting this wrong can be your very own horror story. Hershey’s lost out on $100 million of Halloween sales in 1999 because its ordering and supply chain system wasn’t ready in time, and that wiped 8% off the company’s stock price in a day. A trick like that really makes you wish someone had overturned your garbage bins instead.
According to the National Retail Federation in the US, the annual Halloween market is worth a total of $7 billion, including an average of $26.52 spent on a costume, $21.05 spent on candy, and $19.79 spent on decorations. Even dogs can join in: 11.5% of Americans planned to dress their pets.
So, how do you get your share of the pie?
Meeting the huge spike in demand requires a coordinated effort from the board of directors, purchasing managers, production managers, and the marketing and sales teams. To ensure that they are using the same information as the basis for decision-making, there must be one valid plan for demand forecasting that they all respect. This avoids breaks in the chain, or the cost of storing excess goods when there are more materials or stock than needed.
To provide forecasts that are as nuanced as possible, the demand forecasting system must be able to balance historical sales data with the market intelligence your team has. Crucially, the forecasting has to be responsive to changes in the market. Last year, sales of seasonal Halloween confectionery increased by 12% compared to the previous year. The companies that could seize that opportunity were those that could sense the growth quickly and align the supply chain to meet it – from sourcing raw materials, through production, to sales and distribution.
If you can align your supply chain and create responsive and accurate demand forecasts, you too can enjoy the sweet taste of success.
What’s the biggest challenge you face in handling seasonal demand in your supply chain? Leave a comment below!