Precision and Proportional Forecasting plus Item-Level RFID Will Lead to Sales Uplift
on Apr 22, 2014
As B2B and B2C businesses are facing new challenges, they are turning to supply chain technology to step up their game. However, they shouldn't forget about improving demand planning and achieving item-level intelligence across the chain in the process.
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Both B2B and B2C companies are confronting new challenges: Increase sales. Reduce costs. Manage inventory with more precision. Find high demand, high margin segments and killer products. Be prepared to have the customer approach you in any channel.
Omni-channel Success Is Not Just about the Channel
Often we think of Omni as a B2C issue. But in our Business Priorities 2014 research, many B2B companies said this was a challenge for them too. When potential buyers show up at their websites, many B2B companies are unprepared to understand the nature of their queries. Or existing business customers want to place orders or want information about their orders through mobile, or any channel.
However, a confluence of several events I attended recently highlighted an opportunity for companies to address these issues.
Last week, I attended the RFID Journal Live! Conference and participated in the Retail track. Randy Dunn of Tyco Retail Solutions gave a talk about lessons learned from their customers’ implementation of RFID. As Dunn said, “Omni is not being done by retailers. It is being done to retailers.” That comment really hit me. Our recent research revealed that those who want to step up their game are focusing their tech priorities on getting their house in order to meet that challenge. That requires not just Omni-capture technology, but visibility across the chain. In fact, Checkpoint, Tyco, and TAGSYS, who are all big into retail applications (and are no longer just tag companies), are reporting that retailers’ RFI/RFQ are now all focused on the business process and inventory visibility opportunities of RFID.
In our retail research, leading retailers also told us that once they have real, granular data about inventory, they can develop a better picture of which merchandise is moving and how fast. This data then gets fed into their planning systems. For NOOS (never-out-of-stocks), replenishment systems get more accurate data. Longer term plans, retailers can make smarter merchandising decisions. (Read Why Jeans? for a discussion on this.)
I recently also attended Logility’s user conference and learned about a process and product called proportional profile planning. In essence, this evaluates the demand for a SKU by color, size, and so on (whatever parameters users have—low fat, no fat, full fat, lactose free, for example). Once they know the actual consumption of these products, planners can then develop a new plan that says, “Next time, we will produce more or less of products it appears the market really wants/doesn’t want.” This, of course, means more availability of high-demand products and fewer markdowns or obsolescence of products the market does not want. More sales—more margin. Additionally, on the retail side, the merchandise and allocation systems may need some fine tuning. In talking to JustEnough customers, we learned that allocating products into the right stores and the right channels is also key to ensuring the right assortments. Plan it—execute it.
In the Omni-competition race, companies need to think really hard about their roadmap forward.
The key is inventory. Once the customer determines a product they want, they need to find it so they can acquire it. Finding it has to be followed by AVAILABILITY.
So in the stampede to update the technology channel: ecommerce, mobile shopping, and purchasing technology, don’t forget to put in place demand planning as well as the ability to have item-level intelligence across the chain.
To view other articles from this issue of the brief, click here.