You know you have a higher quality product to offer customers - so why are your competitors’ sales skyrocketing while yours are barely keeping pace? For manufacturers and distributors serving the retail market today, how to get goods into the hands of consumers is just as important to gaining a competitive advantage as the products themselves. Because of the escalating impact of the supply chain on business success, there is a critical need to understand the true drivers of consumer and market demand. This understanding can help build closer relationships with customers, lower operating costs and enhance overall business performance.
Many companies spend significant amounts of time and money investing in infrastructure technology to automate supply chain decisions and provide a framework for integrated decision-making. Now the challenge is to leverage these investments in a big way. Companies are seeking to integrate and optimize processes in order to model a more dynamic and global supply chain. They need to be able to scale exponentially to handle the explosive volumes of data associated with integrating point of sale (POS) information into planning and execution processes so that they can respond quicker to consumer preferences and market trends. They are looking for technology that can optimize and balance inventories across the entire supply chain, so inventory levels are optimized and the amount of working capital needed to deliver high levels of customer service is reduced. And companies want technology that provides the comprehensive modeling needed to continuously evaluate their evolving supply chain - ensuring that operational decisions are being driven by an optimized network that adapts over time.
This all sounds great, but many of you are asking, “Where do I start and what key areas should be my focus?” The following are five best practices for using demand data to drive decisions and optimize business performance.
Adopt a demand-driven, consumer-centric approach to planning and forecasting. In today’s global economy, the battle of the supply chains is no longer being fought on one continent or in one area of the world. Global sourcing competition, localized market events and unstable economic conditions are colliding with fast-changing consumer buying trends, posing a challenge to wholesalers trying to achieve forecast accuracy. In addition, retailers engaged in their own competitive struggles are increasingly intolerant of late deliveries and out of stocks, and material and operating costs continue to threaten profit margins. To combat this, there must be a shift from outdated push models driven by a view of orders and shipments to consumer-centric pull models, driven by a view into POS sales and enhanced promotional collaboration with retail partners.
Companies must anticipate and base plans on not only which products consumers will buy but at what price point, By creating a demand plan for each product; leveraging multiple history streams and forecasting algorithms, classifying products based on demand patterns and differentiating demand being driven by external factors from actual demand history, companies can gain a clearer understanding of what consumers want. This insight can mean avoiding costly mismatches of demand and supply that can result in missed opportunities, lost profits, too much or too little inventory and poor customer service.
Enable your planners to focus less on statistical analysis and more on strategic demand management. The role of planners has shifted as advanced forecasting technologies have emerged that can select the most effective algorithm, optimize statistical parameters and apply advanced forecast consumption. Now, rather than spending time on the management of seasonal-baseline demand, planners can be freed up to focus on the more strategic side of things, including management of product introductions as well as collaboration with sales teams and the end consumer. Information gathered from departments including sales, marketing, product management and customer service can be invaluable. Often this information is a more accurate, real-time predictor of customer demand than relying solely on historical buying patterns.
For example, by collaborating with internal marketing teams, planners can gain insight into the mind of consumers in real time. Web 2.0 is just one unexpected marketing tactic sophisticated companies use to connect with consumers on a more personal level.. Based on historical data a manufacturer may plan for a large number of capris to be sold in the spring and summer. Yet, an evaluation of online surveys and outfit builders launched by the targeted retailer may have revealed that jeans are a far more popular item. By working with marketing, planners can gain access to this information and take it into account when adjusting plans in real time. So the number of capris can be reduced and the number of jeans increased, ensuring greater alignment with consumer demand.
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