EVERY YEAR AROUND LABOR DAY, JUST BORN maker of those gooey pink and yellow marshmallow chicks called Peeps, begins to get ready for its big Easter season. It turns to its sales forecasts, and it purchases mass quantities of sugar, food coloring and packaging to meet the anticipated demand. And every year it gets stuck with leftover Peeps and unused materials that cost it sacks of money.

Just Born manufactures 600 million Peeps a year, 80 percent of which are sold during the Easter season. The 78-year-old, almost $100 million Bethlehem, Pa.-based company also makes Peeps for Valentine’s Day, Christmas and Halloween, but Easter is make-or-break time.

Just Born depends heavily on monthly sales forecasts based on historical data, much of which is gathered from sales representatives who have to wrangle that information from independent candy brokers, whose interests do not always parallel Just Born’s. The data Just Born does manage to retrieve is therefore, to use Just Born Supply Chain Director Don Petraitis’s word, "problematic."

"[Our forecasts] always change as it gets closer to the season," Petraitis says. "Either we’re caught short and can’t respond to demand in time, or we don’t sell enough and are left with overstock."

Petraitis, a 10-year operations veteran with Just Born who admits he had "no formal training or experience" in dealing with the supply chain operations before he was put in charge last June, has already figured out that forecasting software isn’t the answer to the company’s problems. The IT department had tried using Excel spreadsheets, then a forecasting software package from Demand Solutions, but the more sophisticated application did not lead to just-in-time Peeps. It was the quality of the information that mattered, not the software. Now Just Born hopes to link with its suppliers through the Web in a fully automated supply chain, although Petraitis says that’s down the road a ways.

The good news for Just Born is that at least it’s thinking about supply chain management.

The bad news is that it took them so long to do it.

Ramping Up and Winding Down

LOTS OF BUSINESSES, FROM ful-fillment and delivery to clothing manufacturers, lawn and gardening suppliers, and oil companies have to deal with surges in demand that occur predictably around the winter holidays or the onset of hot weather. Supply chain management is relatively easy when it’s handling steady state demands; the real test comes with handling huge seasonal fluctuations.

"If a big part of your revenue comes from activity that goes on in a seasonal period and you don’t build to support it, you are out of business," says Herb Kleinberger, leader of the global retail practice at New York City-based PricewaterhouseCoopers. "You’re toast."