Don’t Get Spooked: Halloween And The Digital Supply Chain

Richard Howells

Halloween 2018 is upon us, and here in the US – where Halloween is the world’s most commercial – supply chains have long ago swung into gear. Retailers’ anticipation of another strong year is sky-high. According to the National Retail Federation (NRF), “Celebrants are planning to spend an average of $86.79, up from last year’s $86.13, with more than 175 million Americans planning to partake in Halloween festivities this year.”

What does this add up to? More than $9 billion in spending. What does the spending go to? According to survey data from the NRF, it breaks down like this:

  • $3.2 billion – costumes (68% of shoppers)
  • $2.7 billion – decorations (74%)
  • $2.6 billion – candy (95%)
  • $400 million – greeting cards (35%)

That’s a lot of spending, but it’s not a record. 2018 comes in slightly lower than 2017, which measured at $9.1 billion. Still, it’s very close – which is what supply chain managers like. Predictability is good. Close attention to industry trends year over year can help you prepare.

The new reality

Preparation, however, only goes so far. The reality is faster, more frequent shifts in demand and increasingly complex global supply chains that resist agility. Responsiveness has never been more important.

Joseph Marver is the founder of Spirit Halloween, the pop-up store that appears in malls for a couple of months every year to sell everything Halloween. For Marver, one of the advantages of the pop-up model (particularly one that repeats on a yearly basis) is that Halloween supply doesn’t go out of style – not much, anyway. A witch costume that doesn’t sell this year will probably sell next year.

But even in Marver’s business, it’s important to stay on top of trends and be responsive. As he told the Newhouse News Service, “You’d better have some money left over for sleepers — movies you didn’t know would be a box-office smash and kids were going to want.”

Things, in other words, can change – and it’s the responsive companies that will win the day. This is true for any industry.

Trump and Kim

Let’s take an example from the headlines. Let’s say something important, funny, or otherwise absorbing happens in the negotiations between the US and North Korea. Suddenly, everybody wants Donald Trump and Kim Jong-un get-ups. How would a digital supply chain help you respond better?

In the first place, it would help to have a demand-driven (rather than supply-driven) version of sales and operations planning in place – one that uses advanced demand signal analytics, automated processes, and alerting to support management by exception. With machine learning, advanced analytics, and the ability to pull in data from everywhere, you could actually sense the demand for Trump and Kim costumes. By feeding data from the news, retail trend trackers, social media, and more into algorithms that detect patterns and reveal insight, you can predict coming trends with enough lead time to react accordingly.

Add to this the power of digital business networks. Such networks connect you to new suppliers in a fraction of the time – suppliers who might truck in Trump and Kim costumes. When a new trend appears late in the planning cycle, you need these kinds of flexible online networks to quickly ramp up with new suppliers and move the goods to stores in time. Digital business networks can also drive collaboration – for internal teams as well as external partners. This helps to align teams quickly and move toward the common goal.

Hand in hand

So, yes, responsiveness is critical – but this doesn’t diminish the importance of proper planning. To be sure, the Halloween costume supply chain is simpler than those in, say, pharmaceuticals, telecom, or aerospace. But one thing is true: In digital supply chains, planning and responsiveness go hand in hand.

Leading players today understand the need for sophisticated sales and operations planning that pulls in data from a wide range of sources and uses advanced analytics to identify patterns and uncover insights. With digital supply chain capabilities, you can track historical inventory levels across complex supply networks that range from production factories to warehouses (at the central, regional, and local levels). You can then mix it with real-time demand data – from social media to point of sale receipts – to plan more effectively.

Toward what end? Toward the end of striking the right balance between the cost of carrying supply and the risk of stock-outs – in other words, toward highly optimized inventory across the supply network. With machine learning yielding insights into the flow of goods through your supply chain, coupled with improved visibility into demand signals, you can optimize your inventory. This can help you meet expectations today – and respond effectively when those expectations change tomorrow.

Happy Halloween! Being from the UK, I plan to dress in some sort of Brexit theme—another story from the headlines that is giving people nightmares.

To learn how you can take the fear and uncertainty out of your supply chain, download the IDC Digital Business Planning Infobrief.

About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.