Using Weather Forecasts to Sharpen Regional Demand Planning

Last year, one national plan met four different summers across the United States. What consumers were “supposed” to buy didn’t happen, leaving some retailers overstocked and others short as demand changed dramatically region by region. When a miss like that happens, what follows is expedited freight into the markets that ran hot, transfers out of the ones that stalled, and markdowns on what remained on the shelf.

As weather conditions diverged, so did household care categories. Pest control sales rose 11.0% in the Northeast, where warm overnight temperatures kept insects active, and fell 4.1% in the West, where dry heat had the opposite effect. Mold and mildew prevention climbed 47% in the Midwest from patchy precipitation and late-season warmth, and 31% in the Northeast following flooding. Across the West, persistent heat and drought pulled nearly every household care category down.

When averaged nationally, the losses in one region offset the gains in another, making overall performance look unremarkable, which is the problem. A product plan can be accurate in aggregate and wrong in the locations where inventory sits. What separated those four regions was weather. Because seasonal outlooks are usually available before buying decisions are made, they should be treated as an early demand signal while inventory plans can still be adjusted

None of those four regional outcomes were random. Each traces a specific condition with a recognized impact on the category. Knowing which region will get which weather pattern is the harder part, and a region's own history is a weaker guide than it used to be.

This story was originally published by SupplyChainBrain. Read the full story at SupplyChainBrain →