Gift Cards – To Forecast or Not to forecast?

Demand Planning has evolved in the last few years – even banks and credit card companies have seriously been involved in demand planning.

They plan their demand for two important reasons among many others –

  1. Cash Management – Keeping cash balances to serve customer needs versus loaning out to make a living
  2. Project retail demand for Gift Cards – somewhat of a much less interesting problem than the first one.

However, they forecast the sale of gift cards by outlet and type.  They have displays and floor stands in super markets just like any other Consumer goods company.

Chase may be selling a Mickey Mouse gift card at Target.  They have demand planning departments and their own print and design facilities to produce these plastic cards.

Print and ship to stores so they are available during the holidays.

The forecast for Gift cards is truly a unit demand plan – the dollars do not matter at least for producing the plastic.  These are loaded at the point of purchase.

They know later how much has been sold from the retailer remittance net of commission.

How does Chase make money – by playing the float!!  A portion of Gift Cards remain unused for long periods of time – the bank keeps the money in its lending operations for a long time.

The demand for Gift card is seasonal, holiday driven!  They are promoted on TV and at point of sale.

More on the forecasting issues and challenges later.

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Valtitude / Demand Planning LLC provides services in Demand Planning, S&OP, Sales Forecasting, and Supply Chain Optimization.

Valtitude was founded by ex-Gillette/P&G Senior Managers in 2004 as Demand Planning Net. Our primary focus initially was to help companies with implementing process and strategy for Demand Planning and Sales and Operations Planning.  Over the years, the company has helped many Fortune 500 companies and SMB businesses with a variety of projects in the end-to-end supply chain transformation.

We have helped a variety of businesses across industry verticals to improve their planning process and create value through SCM analytics and diagnostics, process re-design, solutions implementation, and customized on-site training.

We provide strategy and solutions consulting to customers across a variety of industries – Pharmaceuticals, CPG, High-Tech, Food and Beverage, Quick Service Restaurants, Utilities, Oil and Gas, Aerospace, Chemicals, and Industrial Manufacturing, Automotive, Financial Services, Publishing, etc.

Our consulting expertise includes Corporate Finance, Operations Forecasting & Planning, Strategic Forecasting, Financial Planning & Budgeting, Inventory Optimization, Production Planning, and Scheduling.

Through our unique diagnostics methodology, we help clients understand their specific business and organizational drivers that inhibit the formation of a holistic Demand and Supply Management process. More recent work has included transforming the business processes with re-engineering technology implementations.  We also undertake full-scale System Integrations with our affiliate companies.

What we define as usability consulting helps our clients to better use their advanced planning tools for Demand, Inventory and supply chain optimization. Our clients include Fortune 500 companies such as Pepsi Foods, Abbott Labs, Honeywell and others who seek us for our niche in the area of SCM transformation.

Founded in 2004, the company is headquartered in Boston and has offices in India, China, and the UK.

For more information, on our consulting services visit https://valuechainplanning.com/consulting-details.

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