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Pumpkin Spice and Everything Nice, A Seasonal Supply Chain Story

Dear ASCM Houston Community,

You know fall is approaching when pumpkin spice starts appearing everywhere.

It may have started with the Pumpkin Spice Latte, but suddenly there are pumpkin spice muffins, cookies, cereal, candy, candles, creamers, and, yes, I have even seen pumpkin spice scented pens.

Love it or hate it, pumpkin spice has become a season of its own.

As a supply chain professional, and someone who teaches operations management, I cannot help looking past the flavor and thinking about everything that had to happen behind the scenes to put all those products in front of us at almost the same time.

Consumers may feel as though pumpkin spice suddenly appeared overnight. Supply chain professionals know better.

Long before the first pumpkin spice display appeared, someone had to develop a forecast.

And seasonal forecasting is particularly interesting because demand does not remain constant throughout the year. Businesses have historical sales data, trends, promotions, weather, changing consumer preferences, product launches, and marketing plans to consider. Then someone has to turn all of that information into an educated estimate of how many pumpkin spice lattes, cookies, candles, or scented pens consumers might actually want.

Of course, as I remind my students, a forecast is almost always wrong. The real question is how wrong it will be and how prepared the organization is to respond.

That brings us to inventory.

Seasonal products are a great example of what we call anticipation inventory, inventory intentionally built ahead of a predictable increase in demand. Companies cannot necessarily wait until September to begin making everything consumers will want in September. Ingredients, packaging, finished goods, and promotional materials may need to begin moving through the supply chain weeks or even months earlier.

But how much inventory is enough?

Forecast too low and you risk stockouts, lost sales, frustrated customers, and empty shelves right when demand is peaking.

Forecast too high and October may leave you with warehouses and store shelves full of products consumers have already moved past. And inventory is not free. There are costs associated with the capital tied up in it, storage, handling, insurance, deterioration, and obsolescence. On the other hand, carrying more inventory can help protect customer service and product availability. It is a balancing act that supply chain professionals manage every day.

And we are not just talking about the finished product.

Think about everything supporting a seasonal launch, spices and flavorings, coffee, flour, sugar, packaging, cups, labels, boxes, signage, displays, promotional materials, and all the other components that need to be available at the right place and at the right time.

Marketing may create the demand, but procurement, suppliers, planning, manufacturing, inventory management, logistics, distribution, and retailers all have to be prepared to deliver on that promise.

That pumpkin spice muffin sitting in the grocery store is actually a pretty good lesson in forecasting, sourcing, capacity planning, inventory management, logistics, marketing, and cross functional collaboration.

And that is one of the things I love about supply chain.

Supply chain is everywhere.

At ASCM Houston, we have professionals representing industries throughout our region, and although many of us may never plan a single pumpkin spice product, we face the same fundamental questions.

·       What will our customers need?

·       When will they need it?

·       How much should we have available?

·       Where should we position it?

·       What happens if actual demand is different from our forecast?

And how do we coordinate across the supply chain so that everything comes together at the right time?

Those questions apply whether we are planning pumpkin spice lattes, chemicals, medical supplies, industrial equipment, consumer goods, or any of the thousands of products moving through Houston's supply chains every day.

So, the next time you walk into a store and wonder why pumpkin spice has suddenly found its way into seemingly everything, take a moment to appreciate what you are really seeing.

You are looking at seasonal demand, anticipation inventory, and months of supply chain planning sitting right there on the shelf.

Whether you love pumpkin spice or avoid it completely, I hope this fall gives you another reason to notice and appreciate the supply chains all around us.

Happy Fall, Y’all from ASCM Houston!

Tammy Giesler-Hagans
President, ASCM Houston Chapter