May 17, 2020

Future Fortunes: why predictive data is the key to success

predictive data
consumer caution
Operations
electronic data interchange
Admin
4 min
Future Fortunes: why predictive data is the key to success
To profit in the current climate of intense competition, consumer caution and narrow margins, retailers need to run a lean operation. Retailers need to...

To profit in the current climate of intense competition, consumer caution and narrow margins, retailers need to run a lean operation. Retailers need to work with their suppliers to achieve a streamlined, efficient supply chain that is beneficial for all parties.

Right here, right now

The importance of data insights has been a hot topic in retail for some time now, so the vast majority of businesses will already be aware of the importance of data accuracy and analysis for speed of performance and cost-effective decision making. Nowhere is this more prevalent than in the supply chain, which must enable the fast delivery of goods to keep the customer happy, at the same time as protecting margins.

Increasingly, retailers and manufacturers are adopting a demand-driven approach to the supply chain, using live data to optimise stock and minimise costs. The word live is paramount here; retailers need information delivered in real-time to react to what is happening at that moment, whether that means moving stock across channels, or alerting trading partners to the need for replenishment.

The good news for consumers is that more and more retailers are nearing the points where real-time data insights are a reality for their business. Many have invested in the technology to achieve this, such as Electronic Data Interchange (EDI), which standardises business information to allow the quick, accurate and reliable exchange of data with their suppliers, reducing lead times and the amount of safety stock required. Requesting suppliers to send acknowledgments and advanced shipping notifications (ASN’s) enables retailers to know in advance exactly what is going to be delivered, enabling them to take the necessary action to ensure that potential shortages do not impact their customers.

However, the continually rising bar is a double-edged sword for retailers. On the one hand, they are getting closer to running their business operations based on demand. But, on the other hand, so are many of their competitors.

Look into the future

To outperform the competition, therefore, retailers need to look beyond reacting to what is happening now, and strive to accurately forecast what will happen in the immediate future. This is the most effective way to deliver on what their customers want, at the same time as running a lean supply chain operation, and protecting margins.

So how does the retail sector move from real-time to predictive analytics?

The answer lies in being able to accurately capture and interpret business data. By looking at what has happened historically, identifying trends, and working out averages, retailers can forecast demand.

And as most of the inaccuracies and inefficiencies in the supply chain begin with forecasting problems, predictive analytics lay the foundation for a leaner, more profitable operational model. For example, using an accurate forecast then enables retailers to directly dispatch instead of holding stock, meaning they can order significant quantities of items without tying money up in stock. EDI enables retailers to send their suppliers short and long-term forecast information enabling suppliers to more accurately plan future resource requirements.

Equally, predictive analytics can be useful to prepare for the peak trading period, when demand can fluctuate and spike rapidly. However, it is worth bearing in mind that any insights should be directly linked to retailers’ multichannel offerings, to manage consumer expectations. For instance, if an item is no longer in stock on Black Friday, retailers’ websites must update instantly to avoid consumers purchasing stock that does not actually exist.

Forecasting future fortunes

For any retailer looking to embrace predictive analytics, accuracy really is the key. It is impossible to forecast future demand without detailed insights into what has happened previously. Equally, this information has to be available in real-time, so that forecasts can be updated as the current climate changes.

The challenge for many retail organisations, therefore, is to find the right software to do the job effectively, and this is where EDI comes in. By standardising information, retailers can factor in not only their own data, but those of partners and suppliers, to create the most comprehensive model possible for predicting future demand.

With accurate data and the means of exchanging information in real-time, retailers have the platform required to launch predictive analytics – so whether they are looking at Black Friday or a random Tuesday, they can forecast exactly what stock their business will need.

 

Robert Simpson, European Marketing Director at EDI managed service provider at TrueCommerce.

 

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Jun 19, 2021

Driver shortages: Why the industry needs to be worried

Logistics
SCALA
supplychain
Brexit
Rob Wright, Executive Director...
4 min
Logistics professionals need urgent solutions to a shortage in drivers caused by a perfect storm of Brexit, COVID-19 and compounding economic factors

While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks. 

A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so. 

What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.

"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"


That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.

But where has this skills shortage stemmed from? 

Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.

COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.

It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing. 

So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done? 

Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change. 

Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.

Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line. 

On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains. 

Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months. 
 

Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector

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