Halloween Candy – A Scary Supply Chain Planning Problem

I admit, I love to eat Halloween candy as much as most grade school children (maybe more). My favorite: candy corn of course! What’s not to like about candy that is sugar mixed with more sugar!

I am not the only one with a sweet tooth, according to CandyStore.com, this year Americans will spend more than $2.6B on trick-or-treat candy. I have to believe dentists see this number as both scary and job security. In the interactive “Top Halloween Candy by State” map, CandyStore.com shows my beloved candy corn is the favorite candy for trick-or-treaters in Idaho, Nevada, New Mexico, Iowa, Michigan and Alabama. Digging deeper into the data, CandyStore.com has identified America’s top 10 Halloween candies for the past 11 years.

  1. Skittles
  2. M&M’s
  3. Snickers
  4. Reese’s Cups
  5. Starburst
  6. Candy Corn
  7. Hot Tamales
  8. Hershey’s Chocolate
  9. Tootsie Pops
  10. Jolly Ranchers

 According to the National Retail Federation (NRF), American’s will also spend another $3.2B on costumes, $2.7B on decorations and $400M on greeting cards this Halloween. All totaled we are looking at a Halloween budget of $9B, about the same amount spent on Halloween in 2017. That is an average of $86.79 per each 175 million Americans that plan to partake in Halloween festivities this year. A growing trend amongst ages 25-34 is dressing pets in costumes. Halloween, like any holiday, creates significant seasonal surges for specific product categories. This can create a scary supply chain planning problem for those that are ill-prepared or equipped.

“The economy is good and consumer confidence is high, so families are ready to spend on Halloween this year.”
— Matthew Shay, NRF President and CEO.

Planning for holidays places significant stress on supply chain planning processes and planning teams. The cost of over forecasting is severe. When you boil it down, a product’s shelf life is very short and if you don’t sell it, that inventory will be discounted shrinking already razor thin margins. Good for someone that wants to buy Halloween candy for 75% off the day after Halloween, but not so great for the candy manufacturer or retailer. As evidenced by the CandyStore.com map, regional preferences must be factored into holiday plans to ensure the right product is positioned in the right location. Running out of Reese’s Cups in Texas where 245,135 pounds are projected to be consumed would lead to some mighty unhappy Texan’s (Don’t Mess with Texas!). So how can we ensure that trick-or-treaters from every corner of the world get their favorite candy?

Frequent readers of this blog should know the answer: an integrated Supply Chain Planning System operated by a well-trained team of supply chain planners. Research has shown without a doubt it all starts with the ability to create an accurate demand plan by channel and by selling location. Next that information needs to be used to create an optimal inventory deployment plan that meets projected demand by location and provides the ability for agile response when buying patterns alter from projections. Notice I didn’t say ‘if’. Demand forecasts based on historical data will hopefully get you close, but it is not enough. Holiday supply chains need the ability to sense near real-time market demand through POS data and social signals to augment the historically based plan. Multi-echelon Inventory Optimization (MEIO), for example, can determine the best locations to deploy holiday inventory based on available information. However, as we all know, things can and do change. Non-planned events happen. Early season snow storms or late season heat waves are bound to pop up and challenge the well-thought out plan. An influencer can tweet about their favorite holiday candy and cause a significant change in demand. This is where the ability to conduct ‘what-if’ scenarios can help a supply chain team quickly identify the change and enact a plan to recover in a profitable way.

So planning for holidays like Halloween can be a bit scary, but through the use of an advanced integrated supply chain planning system, we can help trick-or-treaters get their preferred decorations, candy and costumes.

In case you were wondering, the NRF has published its top child and pet costumes for this year. While my children are all grown up, I hear that costumes based on characters from the video game Fortnite are very popular and likely to break into this top ten list. Me? I am old school and still prefer a classic costume like Count Dracula.

Happy Halloween!

Costumes Ranked: Children

  1. Princess – 7.6%
  2. Superhero – 4.9%
  3. Batman – 4.3%
  4. Star Wars character – 3.7%
  5. Witch – 3.6%
  6. Spider-Man – 3.5%
  7. Avengers character – 3.2%
  8. Ghost – 2.9%
  9. Pirate – 2.0%
  10. Frozen (Elsa, Anna) – 1.7%

Costumes Ranked: Pets

  1. Pumpkin – 11.2%
  2. Hot dog – 7.4%
  3. Bumble bee – 4.9%
  4. Devil – 3.2%
  5. Cat – 3.1%
  6. Dog – 3.1%
  7. Lion – 2.9%
  8. Star Wars character – 2.8%
  9. Super hero – 2.7%
  10. Ghost – 2.5%

Written by

Short bio

Supply Chain Brief