Challenging Times Drive New Thinking and New Opportunities in Supply Chain Planning

The COVID-19 pandemic has created unprecedented challenges around the world. In the midst of the seeming chaos many brilliant minds have been working in overdrive to develop innovative solutions to many of obstacles that lie in our way.

Abbot recently announced a new method for fast, accurate, point-of-care testing devices to deliver results in minutes instead of days. Intertape Polymer Group is thinking outside the box and working with Stanfield’s Ltd to produce PPE garments for medical teams on the frontline battle against COVID-19. The Coca-Cola Company and Georgia Institute of Technology are working together to turn plastic sheeting into more than 50,000 plastic surgical shields. These are just a few of the countless and amazing innovations we hear about on a daily basis.

The inspired, short-term efforts of companies like these will help flatten the curve and save lives now. But that’s not the whole story. In a much broader context, the byproduct of this work will be lasting innovation that informs design, production and distribution excellence for years.

At Logility, we encourage you to balance short-term action with long-term planning. Do what you have to today with an eye on tomorrow. That requires focus. We’re going to make it easy by recommending one short-term and one long-term action you can initiate today. Let’s focus on supply.

Cover the Supply Gap Today

Paraphrasing Supply Chain Insights founder Lora Cecere in Forbes, begin by building a war room and mapping your current supply network. It’s likely you’ve already been hit by shortcomings in your supply chain, so take the time to identify remaining risk. Go deep, as in physically map the locations of your second and third-tier suppliers. (Cecere claims that only 1/3 of companies know the locations of their second and third-tier suppliers.) Expect bad surprises.

At the same time, start a frank discussion about which metrics matter right now. Perhaps purchase price variance and budget adherence should take a back seat to customer service.

Build Supply Reliability for Tomorrow

Long-term supply chain strength relies on several factors, including trust and collaboration. In addition, it relies on built-in resilience and quick decision-making, because disruptions will always be with us.

Study other supply chains and ask probing questions. For example, why is the U.S. food supply chain proving to be so robust (so far) relative to the medical device supply chain? There are multiple reasons, but the U.S. food supply network is mostly domestic. Farms and forks are in close proximity. Also, it’s organized around a relatively smaller number of wholesalers, improving the network’s ability to sense demand at critical nodes and react quickly.

Don’t panic. Panicky supply chains are dysfunctional supply chains. Witness the 50 U.S. state governments competing right now with the U.S. federal government to snap up the same limited supply of N95 masks and the near-term production capacity for more masks.

If your organization doesn’t have an advanced supply chain planning and optimization platform to support these efforts, you are risking a slow recovery from this disruption and unnecessary suffering during the next one. Only platforms like that offered by Logility provide the capabilities to plan for the unexpected through powerful artificial-intelligence enabled, purpose-built capabilities that can simulate the effects of disruptions on an end-to-end supply chain, highlight ways to mitigate these effects, and develop action plans that can be quickly deployed.

Finally, use these exceptional times to do something exceptional. Ponder some big goals and blow the dust off a dream. Lacking inspiration? Consider this. To evade a pandemic then raging across Europe, students at Cambridge University were told to leave campus. Sound familiar? One student hunkered down at Woolsthorpe Manor in Lincolnshire and as it turned out made good use of his time. Drum roll…

During an outbreak of the plague in 1666, Isaac Newton, working from home, invented a little thing called calculus.

Work with your Supply Chain Planning Digital Twin

Everyone is working hard to figure out how to stay safe, what is going on, how to minimize the impact to our personal lives and the companies we work for, and to plan for the future. Over the last few weeks, I have spoken with several of our customers as well as industry analysts from ChainLink Research, Gartner and IDC to gain some additional perspective on how the supply chain is coping with this quickly escalating risk. The responses vary quite a bit.

A retail industry analyst said the clients he is speaking with are scrambling around focused on near-term tactics to find inventory to place on shelves and serve consumer needs. Just look at the long lines and empty shelves at grocery stores and big box retailers. Even Amazon is struggling! He mentioned these clients are not thinking about the medium or long-term impact yet. Instead it is all about meeting the short-term need.

At some point though, everyone is going to need to focus on what’s next. What happens when so much effort was given to the short term that you don’t plan for the recovery? What will you do with that summer merchandise that may not make it to retail until Fall? Where will you place that inventory? These are questions everyone from manufacturing to retail must analyze now.

The Coronavirus, hopefully, is just an anomaly that will be in our rearview mirror soon. However, this isn’t the first surprise risk to impact supply chains on a global scale. There have been many opportunities for us to be ready, to have multiple scenarios and models to help base our playbooks and drive our responses. This shakeup to global supply chains has impacted both supply and demand.

As we work with our supply chain digital twin we can quickly visualize constraints across our network, anticipate spikes in demand. Our digital supply chain platform will help to quickly evaluate multiple scenarios and start to work through our response to rapidly identify the supply constraints and define alternate sourcing opportunities across multiple time horizons. We can quickly look at options to ramp up manufacturing and model how changes in our workforce may impact our ability to satisfy demand.

Continental Mills, a leading producer of dry bakery mix products with several popular consumer facing brands including the Krusteaz and Ghirardelli family of dry mixes, as well as a large foodservice business serving many of the leading restaurant chains in North America, faced a significant disruption challenge to their supply chain when the Avian Flu impacted the food and beverage industry.

In early 2015, Continental Mills knew the North American Avian Flu might disrupt its supply of eggs in the coming weeks. An outbreak of the Avian Flu in the Midwest U.S. had the potential to impact nearly 90 percent of the national dried egg supply, a key ingredient for a company that produces dry bakery mixes and uses nearly 2.2 million pounds of the product annually. At the same time, Continental Mills had started its seasonal process to ramp up production for the holiday season.

Early on, before many in the industry were aware, the Continental Mills team began evaluating alternative business scenarios that might enable the company to serve customers even with the impact of an Avian Flu disruption.

Strong relationships and close collaboration helped Continental Mills develop a model that showed the egg supply was likely to not reach pre-Avian Flu levels until March 2016. The company acted quickly to ensure it was able to meet its forecasted demand without a disruption in service. First and foremost, the internal team wanted to know what suppliers were affected and how that would impact their operations. The team then reprioritized production and simulated how far the current supply would go.

Continental Mills’ response leveraged its sales and operations planning (S&OP) process with clear communication across the company to leverage a variety of creative thinking, process innovation and formulation expertise. All core functional areas within the business (research and development, supply chain, sales, marketing, etc.) were involved from the very beginning to fully understand the impact this event would have to each group and how everyone could play a significant role in turning the situation around.

With Logility as the foundation for its supply chain planning, Continental Mills was able to quickly segment demand and rationalize its product portfolio to clearly prioritize products and formulations, which could be modified and those that, if needed, could be postponed. The company was able to take advantage of Logility’s ability to rapidly plan and re-plan multiple scenarios. In short order, Continental Mills was able to run several hundred scenarios and evaluate the impact of each option; gaining confidence with a multi-pronged approach to address the raw material shortage.

These quick actions ensured Continental Mills was always ahead of the crisis. They were able to effectively cover the supply gap, reduced the costs of formulations without any impact on the quality of the final product, and improved collaborative relationships with its key customers.

There is one certainty in supply chains: unexpected events will happen. To handle the unexpected you must prepare. Understand and model your network, inside and out, including key trading partners (supplier and customer) relationship to build your digital twin.

Don’t just draw a map; look at the intersection of each relationship and its impact across the network. As in the case of Continental Mills, make sure you have an open dialogue started with key partners inside and outside your business.

Trust is a critical success factor. Make sure you have trust built before a situation arises. Trust in your team, business impact assessment and ability to consider alterative scenarios. Another success factor is technology. The capability to quickly model and evaluate multiple scenarios can be the difference between success and failure. Spreadsheets, full of conflicting and nonintegrated data, put your business at risk, introduce uncertainty and reduce flexibility when responding to disruptions.

We will get past this and learn a lot from the experience. Take these learnings and build on them. Most importantly right now, make sure you and your family are safe.

Year after year, survey after survey, forecast accuracy continues to be one of the top metrics for measuring supply chain performance. There is a lot of pressure on planners to improve this important metric and while no plan will ever be 100 percent accurate (that would be an order after all), it is important to get as close as we can to help synchronize the supply chain and satisfy both our financial and service level objectives.

With the advances in machine learning and artificial intelligence (AI) we are now able to take in large volumes of both structured and unstructured data to derive meaningful insights that impact forecast accuracy. Russell Goodman, editor-in-chief at SupplyChainBrain, sat down with several supply chain leaders to discuss the impact of Forecast Accuracy on driving better decision making.

Hear from Citizen Watch America, Clarios, Finish Line,

Haggar Clothing Co., and Tillamook County Creamery Association.

 

These leaders discuss how a digital supply chain platform allows them to harness new demand signals, develop a more accurate plan that can be refined as needed and quickly model multiple scenarios with a supply chain digital twin. A digital platform can give you the ability to make decisions faster or to ensure the right inventory is placed when and where it has the greatest margin potential. You also have the opportunity to increase collaboration both with internal stakeholders as well as external trading partners, suppliers and customers. For example, as Elaine Videau of Tillamook County Creamery Association notes, “You can build a plan that drives supply chain as well as finance, sales and other departments. That is very powerful; one forecast to drive the business forward. “

Take a few minutes and watch what these leaders have to say about their forecasting process and how the right people, process, platform and data can help you transform your demand planning for better, faster decision making.

(Watch: When Planning for Forecast Accuracy, Visibility is in Demand.)

 

Additional Reading:

Logility in collaboration with Peerless Research released the report, The Keys to Creating and Leveraging Actionable Information, which highlighted feedback from executives on the opportunities, challenges and use of advanced analytics across their supply chain. As a result, an interesting statistic surfaced:

“Only 22% of companies have implemented an advanced analytics initiative to help them achieve their supply chain and customer service goals.”

We hear the benefits of advanced analytics buzzing around in industry conferences, periodicals and customer testimonials across every industry. If they are buzzing so loudly, then why are 78% of companies still operating without them? Supply chain teams continue to be stretched thinner day by day and are constantly met with the pressure of rising business and customer expectations. The advanced analytics ‘laggards’ continue to rely on spreadsheets and legacy systems that make it nearly impossible to harness the influx of data available today.

How to become a LEADER in Advanced Analytics

An important goal of a supply chain analytics initiative is to enable better business decisions that allow you to be more responsive to rapidly changing consumer needs.

Want to take the steps to become a leader? Ask yourself these three questions:

  1. Do you have the right people and roles laid out to secure and organize your supply chain talent?
  2. Is there a process in place that allows you to discover the best opportunities for advanced analytics in your supply chain and work off a single strategic business plan?
  3. Is the data feeding your supply chain consistent and accurate?

There is no question that advanced analytics can help your company make smarter business decisions faster. At Logility, we see this every day! However, taking the first steps can be the most difficult. Are you ready to become a leader in advanced analytics? You’ll be glad you did!

As we wrapped up our 2019 Velocity Conference in Orlando last week, I was reminded how lucky we are to be in supply chain. For three days we had the opportunity to listen to some of the top supply chain leaders and visionaries discuss their challenges and how, through people, process, technology and data, they are able to transform their operations to create faster, more flexible and responsive supply chains that result in a competitive advantage for their businesses.

The best part of my job is working with our customers; setting strategies and goals to overcome challenges and celebrating the successes they achieve. My role with Logility provides the opportunity to work with a number of companies that are focused on improving their operational efficiencies, boosting omni-channel performance, and streamlining and automating complex global planning networks – just to name a few. The pace of innovation and change in supply chain is accelerating and it’s fascinating to learn about so many businesses and how each prioritizes and pursues their digital transformation initiatives.

Recognition of Excellence

Supply Chain Transformation WinnerAt the 2019 Velocity Conference we recognized several companies for their digital supply chain transformations.

Recipients of the 2019 Accelerator Awards: Follett, Leupold + Stevens, Jockey International, Inc., Siemens Healthineers and Smithfield Foods, Inc. Each of these companies were recognized for leading digital supply chain initiatives that resulted in significant business impact through the combination of people, process, technology and data to drive innovation.

2019 Velocity Award Winner: Tillamook County Creamery Association received the prestigious Velocity Award in recognition of their aptly named initiative, The Tillamook Supply Chain Transformation Project. This initiative was all about strategic growth for the business, building their brand, serving a global customer base and expanding their product portfolio. This exciting growth initiative recognized the need for comprehensive supply chain planning and was powered by Logility Voyager Solutions™ to provide one source of the truth to fuel better fact-based decision-making.

The 10X Challenge

These Accelerator and Velocity Award winners, along with the many other companies presenting at the conference, each embrace transformation and the digital supply chain. As Allan Dow, president of Logility shared with attendees, these companies are increasing their speed and agility to support accelerated growth and cost-effectively exceed service level requirements. As he noted during his opening keynote address, looking out 10 years, companies across industries and geographies will need to improve their supply chain capabilities by a factor of 10. That means increasing speed and agility 10X. Managing a network that is likely to be 10X as complicated as today’s global market. Customer demands that are 10X more than the pace we currently face. To be successful in this speed-driven transformation you must execute on these three tenants:

  • Automate through Artificial Intelligence (AI)
  • Implement a Supply Chain Master Data Management (SC MDM) strategy
  • Organize for Agility

Supply Chain Keynote

Innovations in Supply Chain

Supply chains move at a ferocious pace and are fueled by multiple data streams available from both internal and external enterprise systems, social networks, syndicated streams, IoT (Internet of Things) and more. Commodity prices, weather information, market trends and geospatial data are just a few of the data points that can influence short-term supply chain performance. To succeed and meet the 10X Challenge, companies will need advanced AI (artificial intelligence) and ML (machine learning) to transform data and help predict customer needs, identify trends, address disruptions and deliver a more synchronized supply chain from product concept to customer delivery.

Success in the supply chain is based on four factors: people, process, technology and data. To help accelerate more precise decision making it is important the solutions that power supply chains and integrated business planning (IBP / S&OP) deliver the latest innovations and are a platform to help meet and exceed the 10X Challenge. Taking advantage of the latest technological developments can be a challenge for many companies running legacy solutions or those that are reliant on ERP providers for their supply chain capabilities. The upgrade paths are long and expensive. This process must be simplified. Through our Logility Evergreen program we are helping accelerate and simplify upgrades to the latest platform so our customers can benefit from artificial intelligence and machine learning to accelerate supply chain decision making.

A few of the AI and machine learning-based features available in the Logility Voyager Solutions platform include:

Logility Voyager Pulse Wise™: A new autonomous capability that continuously senses, analyzes and automatically updates the demand planning parameters to ensure the supply chain operates at peak performance. The AI-based solution monitors forecast accuracy in real-time and adjusts forecast parameters autonomously for each item to increase accuracy and ensure the supply chain operates at peak performance.

Advanced Demand Simulation: Utilizes advances in AI to run concurrent simulations based on forecast variability to determine a company’s ability to meet revenue goals. These advanced analytics help identify supply chain resiliency based on demand variability to identify a risk factor for any given item or product family.

Enhanced Multi-echelon Inventory Optimization (MEIO): Uses multiple algorithms to determine the best inventory investment targets based on demand characteristics, service level goals and available budget. Machine learning algorithms automatically select the best inventory policy for each item across a company’s product portfolio considering demand characteristics ranging from high volume to sporadic.

Logility Voyager Solutions Inspiration Board: A Pinterest-like workspace where traditional text based assortment plans become vibrant visual representations of collections. This allows brand owners to merge the art and science of buyers and planners to provide greater visibility throughout the planning process and ensure each sales channel is able to meet its plan.

Advanced Demand Sensing: An innovative solution that leverages AI and multiple data streams to create an accurate sense-and-respond forecast to increase margins and optimize inventory deployment. The solution builds on traditional approaches to accelerate decision-making for improved service levels, reduced inventory investment and increased profitability across retail, consumer goods, consumer electronics, and food and beverage industries.

Twenty years ago could you imagine we would be talking about same day delivery, the role of AI in sensing and responding to changes in demand and supply? Just imagine what 10 years in the future will be like. Will the Star Trek holodeck be a reality where products are beamed or digitally printed at the customer location? While that may be a bit far-fetched, I am certainly excited to see how we continue to innovate and drive value and I look forward to celebrating the success our customers achieve along their supply chain transformation journeys.

Live Long and Prosper!

(Velocity 2019 Photo Gallery)

You have the place and you have the merchandise. But, do you have your merchandise in the right place, at the right time to serve your customers? This is a tale as old as time, yet retailers continue to struggle on a daily basis. The ability to properly align available merchandise at the time and point of demand will determine how well you compete in this dynamic market. Solving this challenge branches across all specialty retail stores to department stores, mass merchants, vertically integrated retailers, etailers and manufacturers.

Your Goal: Reduce your markdowns and inventory carrying costs while maximizing margins to ensure your customers are best serviced with the right inventory in the right place at the right time. In part one of this two part series we will discuss five elements to help boost your retail performance and turn this old tale into a new dream for success.

  1. Plan High, Allocate Low

Retailers tend to execute their merchandise planning at high levels for key variables such as inventory dollars, sales dollars and gross margin. However, allocation occurs at a much more granular level. You need to apply changes made at higher planning levels down to individual items, locations and times. You then need to incorporate store specific trend projections and individual store size needs up the hierarchy to serve the target customer shopper.

  1. Automate, Automate, Automate

Most retail planning assortment and allocation teams tend to focus on the proverbial squeaky wheel instead of spending their limited resources and valuable time on strategic actions to drive the business forward. Leading retailers leverage automated workflows and eliminate duplicate data-entry into multiple systems. The key is to work with a powerful planning platform that is flexible enough to automate your unique allocation process to free up 50 percent more of allocator time. With the right solution you can automate more than 80 percent of your allocation and replenishment with greater precision and accuracy.

  1. Handle Uncertainty

Retail merchandise allocation can be a daunting process when dealing with seasonality, new product introductions, fast fashion and localized demand segmentation. Your allocations must be responsive to short term trends at the most micro level. You need the ability to project each item’s performance by modeling it on existing items, relevant product groups or categories using their mean or median sales numbers.

  1. Manage by Exception

Alerts and advanced analytics quickly draw attention to high priority areas so they can be resolved. The retail allocation system must provide the ability to establish and automate business rules that reflect how your unique enterprise operates including priority channels, regions, assortments and target performance to name a few.

  1. ‘What-If’ Scenarios

It is often impossible to anticipate the different outcomes from implementing one plan versus another, but manually generating multiple plans and comparing their effectiveness is labor and time intensive. This leads allocators to use an approach they are comfortable with, though it may not be the best one. The ability to create a digital twin and model multiple scenarios to evaluate alternative sales and stock plans (without IT involvement) allows planning teams to identify and select the best course of action to support profitable goals and satisfy customers.

Stay tuned for part two where we will discuss more tips on how to optimize your retail allocation process.

Additional Reading:

Apparel is an exciting and rapidly changing industry. Planners need to contend with inconsistent consumer buying behavior, the need to satisfy multiple channels, complex sourcing options and proliferating “sub-seasons,” collections and assortments. These are just a few of the challenges apparel manufacturers and retailers must overcome to operate at peak performance and compete in today’s dynamic market.

How can you achieve exceptional planning at the store level, a greater ability to react to in-season replenishment signals and develop a streamlined sales and operations planning (S&OP) process? Here is a four-step approach to help you jumpstart your supply chain results.

Step 1. Create a Timely and Accurate “One-Number” Plan

It is quite common to create a long-range forecast that can stretch out 12 to 36 months. The further out you plan the more difficult it can be especially for those that still rely on legacy systems or spreadsheets. Changes in fashion trends, weather patterns or even regional events can change the output of a long-term forecast. On the business side, fragmented or siloed departments often focus on their individual goals and not the success of the overall business. According to the most recent BRP Merchandise Planning Survey, 42 percent of companies still plan separately within each channel. The result is a fractured supply chain with disconnected forecasts created by different departments. Brand owners need a plan that uses both top-down and bottom-up inputs to create a “one-number plan” the entire organization can trust and use.

Step 2. Establish In-Season Excellence to Maximize Sell-through

Despite the proven technology available, many companies still rely on spreadsheets to perform complex, multi-faceted planning. To reduce stock-outs and markdowns apparel manufacturers and retailers must improve their in-season performance. Industry experts continue to show that reducing stock-outs and markdowns leads to an increase in profits. The rewards are great for companies that improve in-season performance by increasing the availability of fast-moving items and reducing quantities for slow movers. And, your consumers will feel a sense of urgency to buy now instead of waiting for a mark-down.

Step 3. Segment Customers to Develop a Synchronized Supply Chain

A reliable “one-number plan” combined with maximized in season sell-through sets a strong foundation for a synchronized supply chain. Apparel companies that segment customers and localize assortments are able to maximize full price sell through. Segmentation places more emphasis on the supply chain as apparel companies look for the most intelligent way to design, source, manufacture and deliver increasing varieties of merchandise to more consumers. Companies that struggle to efficiently manage their supply chains need to go beyond spreadsheets and optimize their planning, sourcing and replenishment.

Step 4. Integrate the Three Steps into a Sales & Operations Planning Process

In steps 1-3 we created a unified “one-number plan” to be used by all departments and we developed processes to better understand demand patterns and synchronize inventory investments with supply and sourcing needs for increased visibility. The final step is to combine steps 1-3 together to drive a competitive advantage and improve sell-through while decreasing overall inventory.

To manage the integration of all departments and core competencies, such as revenue, allowances and gross margin return on investment, apparel manufacturers and retailers need a robust and consistent sales and operations planning (S&OP) process that presents forward-looking plans in both volumetric and financial measures. This allows you to understand exactly the volume of merchandise needed to make your revenue plan by channel. Successful companies place equal emphasis on the people, process and technology.

How are you driving innovation across your organization and designing your successful apparel supply chain?

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If you were to take a guess, how many years of sales history do you think you need to create a forecast? Five years? Ten years? The answer may surprise you.

Myth #3: You need several years of data to create a forecast.

For most levels of management within an organization, aggregated demand history acts as a baseline for effectively product demand and is a great predictor of future performance. But, how much history is enough history?

Reality: Product SKUs with at least one year of sales history offer sufficient information to incorporate a seasonal profile into the projected trend.

Creating a forecast for new product introductions, seasonal products and end-of-life products continues to be a major challenge for today’s planners. However, there are techniques to overcome these challenges. For example, an attribute-based model looks at a wide variety of demand profiles that planners can use to characterize the new product and quickly adjust the product’s plan based off early demand signals. This method will analyze historical sell-in and/or sell-through data to develop a wide variety of demand and seasonal profiles. These profiles are assigned to individual planning records. Then, as actual demand information is captured, the current profile is validated to dynamically adjust the product’s plan.

Attribute-based modeling consists of four unique processes.

  1. Creation of Demand Profiles – The demand planner selects products to be included based on attributes such as color, fabric type, region of the country and more. Multiple attributes can be used at once.
  2. Assigning Demand Profiles – Advanced attribute-based models offer ‘user-defined attribute’ matching capabilities, allowing the planner to set criteria for how a new product’s attributes must match the attributes of a demand profile.
  3. Automatic Revision of the Forecast Based on Demand Signals – Forecast accuracy must be monitored continually using data such as Point-of-Sale (POS) to accurately monitor customer buying patterns.
  4. Assess Accuracy of Demand Profile Based on Demand Signals – New products never sell exactly the same way as other products with similar attributes. But by using point-of-sale or other demand signals, the accuracy of the assigned curve can be checked against other demand profiles that have similar attributes.

There are many solutions available for planners that struggle to create forecasts for products with limited history. What types of products are you forecasting? What kind of demand history do they have? As always, your feedback is always welcomed at thevoyager@logility.com.

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The art of retail is to delight and serve a specific consumer demographic. Managing a successful retail business is combining this art with the science of excellent business strategies and objectives.

Want to merge the art and science of retail planning to compete in this marketplace? The following 5 steps will help you become more agile and responsive to fast-changing customer trends through more effective merchandise planning, assortment, allocation and replenishment.

  1. Enable Collaborative, Cross-Channel Planning

Consumers are in control and have access to the channel of their choice when and where they are ready to buy. For many retailers, these channels are rarely in-sync. While the store may have a surplus of inventory, the e-commerce distribution center may have back orders and out-of-stocks. According to the 2017 Merchandise Planning Survey Benchmark Research, 64% of retailers state that better integration of merchandising and planning activities are their top business priorities. Retailers must implement a collaborative, cross channel planning platform that delivers the visibility they need to increase full-price sell-through and in-stock performance.

  1. Implement an Integrated Planning Platform

Retailers’ siloed approach to cross-channel planning often leads to stranded inventory. When retailers gain visibility across the enterprise they can see where demand is occurring at a granular level. This can lead to better planning and help reduce initial allocation levels by holding back inventory. Planners can then monitor demand patterns and quickly allocate inventory where it has the best chance to deliver the highest margin contribution. An integrated approach allows planners to see what the demand is by both location and channel at a moment’s notice.

  1. Automate Allocation and Replenishment

Allocation and replenishment can be tedious processes when managed with spreadsheets or obsolete homegrown solutions. An integrated platform drives consistency in the process and trust in the data and can automate both the push-based allocation and the pull-based replenishment. Today, leading retailers are able to confidently automate the majority of both the allocation and replenishment processes. Automation frees planners from routine repetitive tasks and the optimized work flow helps transform the allocation and replenishment planning position while developing higher skill sets and decreasing turnover. A more rapid flow of allocations to the warehouse also allows retailers to satisfy consumer demand at record pace. To hear first-hand how a fast-fashion retailer reduced its initial allocation by 20 percent watch the on-demand webcast: Groupe Dynamite: Retail Optimization.

  1. Improve Assortments with Better Omni-channel Planning

Consumer demands change by the minute and when retailers plan in silos they introduce inefficiency into planning, assortment and inventory. To a consumer, the online channel may be very different from the in-store channel. This creates confusion for the buyer and dilutes the brand as a whole. When planners have visibility across channels they can fashion assortments that are unique for each channel and location. This unifies the brand as a whole and provides a more pleasant experience for the consumer.

  1. Analyze Results to Improve Forecasting and Create Efficiencies

Planning systems must continuously analyze where demand is occurring so it can recommend the best plan for the business. An advanced planning solution enables retailers to look at multiple demand signals from the historical sales to real-time point of sale data to create the best forecast. Robust forecasting and analytics are essential in this process.

Retailers who use these five tips will be a step ahead of their competition. To become a champion retailer, you can no longer operate the way you have in the past. The future of retail is now.

Video – The Future of Retail Planning


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Forecasting Myth 2This is the second post in a series of common myths around forecasting. Here we explore how forecasts can be created for even the most volatile demand patterns.

Myth: You cannot create an accurate forecast for products whose demand histories contain lumpy or intermittent demand patterns.

Demand planners may think creating a unique forecast for products whose demand histories contain lumpy or intermittent demand is a lost cause. However, there are techniques that permit zero demand to reside in the history and can still forecast demand.

Reality: There are advanced techniques that can improve forecast accuracy for items with lumpy and intermittent demand.

A common challenge for many planners is to create an accurate forecast for products with intermittent or lumpy demand. For many companies, 80% of their revenue comes from 20% of their products, and the other 80% of products will have fairly low demand that is intermittent or lumpy. Many statistical forecasting methods cannot handle history that contains periods of zero demand. In addition, most statistical methods do not do a good job when demand history is lumpy, meaning a non-repeatable pattern of high and low demand periods. So, how can demand planners forecast for a product with all of these existing barriers? One method is to use the Modified Croston technique to create forecasts for items with periods of zero or lumpy demand.

A Modified Croston method handles low and lumpy demand that exhibits either a patterned variation or no pattern at all. The patterned variation looks at available history and analyzes each demand element relative to those around it. It classifies the periods into peaks, valleys, plains, plateaus, up-slopes and down-slopes. It measures the duration of plateaus and plains, as well as the severity of peaks and valleys and then conducts pattern-fitting analysis to find regularity over time, attempting to fit the pattern to the history and averaging for low and high points. If no pattern is present, the unpatterned variation method attempts to use averaged highs and lows to create a step-change forecast for future demand. This results in a forecast for your product with lumpy and intermittent demand.

What other forecast myths have you identified? If you missed part 1, read it here and learn how to develop a forecast that is unique to your business.

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