Seasonality and supply chains: how Falcon can help you avoid the burden of trapped capital
Few businesses are immune from the impact of different times of the year on the availability of materials or the demand for goods.
Although refrigeration has long since revolutionised food supply chains, production is still heavily influenced by when produce can be grown and harvested. Production will also need to be ramped up to meet seasonal demand, be that ice cream in the summer months, hot chocolate over winter. The time of year can also bring acute weather challenges, be that flooding, snowfall, or the sixth-month North Atlantic hurricane season. Seasonality is, therefore, a key variable in supply chain dynamics.
Seasonality is not limited to the weather.
The desire for toys and electrical goods will also grow dramatically in the run-up to the holiday season, peaking on Black Friday and Cyber Monday. Fortunately, these events are locked in the calendar each year, enabling businesses to manage by stockpiling accordingly. Suppliers will ramp up production to build inventories in preparation for spikes in demand, and food manufacturers will purchase enough stock during a harvest window to ensure they can produce year-round.
Stockpiling is a simple solution to a predictable problem. However, it is not without downside.
It results in asset-heavy balance sheets and trapped capital. The rationale is that the alternative – suppliers running out of goods just when they are most in demand or manufacturers being limited to producing goods within strict timeframes – is far worse.
But is stockpiling the only option?
Falcon Group offers a solution whereby we buy goods or inventory and then sell them to the customer when needed on a Just in Time basis. In the meantime, products are owned by Falcon and held in the customer’s own warehouse or in a geographically relevant third-party facility until required. In more complex models, Falcon’s agility and expertise mean it can insert itself effectively between a customer and multiple suppliers and ensure the smooth and timely flow of goods and funds throughout the supply chain. Falcon can help suppliers to prepare for peaks in demand and provide manufacturers with access to inventory year-round whilst avoiding the burden trapped capital and an asset-heavy balance sheet.
Contact Falcon’s supply chain expert Bob Belshaw at [email protected] to learn more.
For more information, please contact [email protected]
This article has been prepared solely for information purposes and the opinions expressed and set out herein are illustrative only. Please note that any content in this article is based upon Falcon’s own views and opinions and should not be relied upon by the reader as advice. Falcon shall not be liable for losses arising out of reliance on this article.
