How do I plan production for seasonal peaks?
If your products sell significantly more during certain times of year—holiday gifting, summer beverages, back-to-school snacks—you face a production planning puzzle. Produce too little and you miss sales during your most profitable period. Produce too much and you're stuck with inventory that expires, ties up cash, or requires deep discounts to move.
The key to seasonal production planning is starting early, building flexibility, and making data-driven decisions about how much risk to take.
Start with historical patterns
Your first step is understanding your actual seasonal pattern. Pull at least two years of sales history (three or more is better) and look at month-over-month or week-over-week demand.
Calculate a seasonality index for each period. If January averages 80% of your monthly average and December averages 150%, those are your indexes. Apply these indexes to your baseline forecast to create a seasonally-adjusted demand plan.
Be careful with growth rates. If you grew 50% last year, don't simply multiply last December's sales by 1.5. Separate growth from seasonality. Your new baseline might be 50% higher, but the seasonal pattern should remain similar unless something fundamental changed.
Planster builds seasonality into demand forecasts automatically, using your historical data to suggest the best-fit model. You can adjust for known changes like new retail distribution or discontinued products.
Map production capacity constraints
Understanding demand is only half the equation. You also need to understand how much you can actually produce.
Your own facility: What's your maximum weekly or monthly output? What limits capacity—equipment, labor, space? Can you add shifts or weekend production?
Co-packer capacity: What commitment do you have from your co-packer? Is it flexible or fixed? Are you competing with their other clients for peak-season slots?
Raw material availability: Can your suppliers scale with your demand? Specialty ingredients may have their own seasonal constraints or allocation limits.
Create a capacity calendar showing maximum production by week or month. Compare this to your seasonal demand forecast. The gaps are where you need to build inventory ahead of season.
Calculate inventory build requirements
When peak demand exceeds production capacity, you have to produce ahead. This pre-season inventory build requires careful planning.
Example calculation:
November demand: 50,000 units. December demand: 80,000 units. Monthly production capacity: 60,000 units.
November production needed: 50,000 (demand) + 20,000 (December prebuild) = 70,000 units. But capacity is only 60,000. So you start building in October: produce 60,000, sell 40,000, bank 20,000. November: produce 60,000, sell 50,000, bank 10,000, carry 20,000 from October, net inventory +30,000 going into December. December: produce 60,000, sell 80,000, draw 20,000 from inventory.
This waterfall calculation reveals how far in advance you need to start building. For significant peaks, that might be 2-3 months ahead.
Manage the cash flow impact
Pre-building inventory ties up cash. You're buying materials and paying for production before you collect revenue from sales.
Calculate the working capital requirement. If you're building 30,000 extra units at $10 cost each, that's $300,000 in inventory. Add raw material purchases for the build period and you might need $400,000 or more in working capital.
Plan financing early. If you need a credit line or inventory financing, arrange it months before the build starts. Don't wait until you're mid-build and running out of cash.
Negotiate payment terms. Try to extend supplier payment terms during build periods. If you can pay for October materials in November, your cash flow improves significantly.
Build in flexibility
Forecasts are always wrong—the question is by how much and in which direction. Build flexibility into your peak-season plan.
Postponement strategies: Can you produce unlabeled or unfinished goods and customize late in the process? This works for multi-SKU products with shared components.
Safety stock tiers: Set different service levels by channel. Your biggest retailer might get 98% fill rate while DTC accepts 95% during peaks.
Demand triggers: Define thresholds that trigger additional production runs. If sell-through exceeds forecast by 20% in the first week of November, immediately schedule extra production.
Supplier agreements: Negotiate the ability to increase raw material orders during the season, even if it means paying a premium.
Plan for the other side of the peak
What goes up must come down. If you overbuild for the peak, you'll have excess inventory in January.
Know your product shelf life. If inventory expires in 6 months, January excess needs to sell through by June. Can your non-peak demand absorb it?
Plan markdown strategies. Better to have a planned promotion in January than panic discounting in March. Build potential markdowns into your margin calculations.
Consider donation or destruction. For perishable goods, sometimes the right answer is to produce less and accept some stockouts rather than risk waste.
Key takeaways
- Analyze historical seasonality patterns and separate seasonal indexes from growth trends
- Map production capacity constraints—your own facility, co-packers, and raw material suppliers
- Calculate inventory build requirements by working backward from peak demand through capacity constraints
- Plan working capital needs for pre-season inventory builds and arrange financing early
- Build flexibility through postponement, tiered service levels, and demand triggers
- Plan for post-peak excess inventory before you overbuild
Frequently asked questions
How early should I start planning for seasonal peaks?
For significant peaks, start planning 6-9 months ahead. This gives you time to secure capacity commitments, arrange financing, and begin inventory builds. If you're making changes to your supply chain (new co-packer, new suppliers), add even more lead time.
Should I prioritize avoiding stockouts or avoiding excess inventory?
It depends on your economics. If your gross margins are high and your product has a long shelf life, leaning toward more inventory makes sense—missed sales cost more than carrying costs. If margins are thin or products are perishable, err toward less inventory and accept some stockouts.
How do I handle a new product with no historical seasonal data?
Use analogous products or category data. If your new protein bar has no history, use the seasonal pattern of your existing bars or industry category data. Be conservative in year one—it's better to learn from mild stockouts than from massive excess.
What if my co-packer can't provide peak capacity?
Options include: starting builds earlier, finding secondary co-packer capacity, producing some SKUs in-house, or accepting that you'll allocate limited supply to highest-value channels. The worst option is to promise what you can't deliver.
How do I coordinate with retailers on seasonal inventory?
Communicate your plans early. Share your supply capabilities and ask about their promotional plans. If you can't support every retail promotion, help them prioritize. Most retailers prefer honest capacity conversations to stockouts during their peak selling periods.