May 17, 2020

Three ways wholesale distributors can improve planning and synchronise their pace with retailers

Supply Chain
Patrick Buellet
4 min
Consumer demands for convenience, choice, price and experience continue to change at a rapid rate. Staying one step ahead of the trends is key to succes...

Consumer demands for convenience, choice, price and experience continue to change at a rapid rate. Staying one step ahead of the trends is key to success in retail, but historically, this has not always been easy. Efforts to keep up with customers’ evolving wants and needs often result in too much of the wrong inventory and too little of the right inventory, and in the wrong places.

Retailers have therefore shifted their priorities in recent years to keep up with consumer demands, with better stock forecasting rising to the top of retailers’ priority list, behind only customer analytics. This puts pressure on brands and wholesale distributors to become better partners by identifying more precise forecasting strategies and delivering more accurate, and flexible, projections and plans. While in the past, retailers have been better than their wholesale counterparts at implementing new technologies that help them be more accurate with inventory and replenishment planning, there are now ways that wholesale distributors can effectively connect the right stock to retailers, and ultimately, consumers.

A key issue in inventory forecasting is the gap between consumer demand and wholesaler fulfilment. Patterns of behaviour in physical stores are no longer the exclusive or most reliable source of demand signals, so retailers and distributors have had to approach forecasting from a new angle. The response of successful distributors has been to implement new processes and technology applications that streamline information aggregation, analysis and communication.

The future of forecasting

The vast improvements in next-generation forecasting systems has led to a whole new way of approaching inventory in retail and has brought many benefits to the supply chain. This new technology can perform more in-season and local demand re-forecasting, and can continuously refine and revise predicted outcomes and adjust sourcing accordingly. Below are three key ways that wholesale distributors can improve inventory and replenishment planning, to create more profitable outcomes for themselves and their partners.

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Inventory fulfilment – it pays to be in the know

The impact of omnichannel retail has affected distributors faster than predicted. As more and more retailers start to use store networks as local distribution centres rather than warehouses, the amount of inventory in each location is spread more thinly, so the margin for forecasting error across the supply chain becomes ultra-narrow. Stellar replenishment and inventory planning are critical, and knowing exactly which adjustments need to be made, at precisely the right moment, is key, too.

To do this, distributors must deploy systems that have the power to dynamically process a complex and diverse group of orders and other market signals, and to update fulfilment execution based on best practices. Moreover, this needs to happen in real time to create responsive and accurate distribution decisions. Automation is also vital, so that store reps can avoid manually touching orders each day, freeing them up for other tasks, reducing manual errors and improving time-to-action.

Keep an eye on retail partners

Retailers have made and continue to make increasingly impressive steps to create a consumer-centric world – one that’s built on fluid behaviour, and information transfer with real-time access to big data and analytics. This will enable them to achieve perfect availability. Crucially, though, they can’t understand customers without data from their supplier partners, including brands and the distributor.

Working together efficiently is key for both parties. By taking advantage of tools that provide more transparency – such as portals that offer visibility to vendors and retailers, and business intelligence analytics that measure collaborative performance – partners across the supply chain gain new insights and create a clear line of sight from one end to the other. By creating more accurate data feeds that allow A.I.-enabled systems to deliver hyper-accurate and real-time projections, all parties benefit from more efficient operations and more profitable outcomes.

Don’t neglect demand forecasting

Demand forecasting is essential for anyone in a retail network, and especially for distributors. This is nothing new, but it is a quickly evolving practice. Distributors often find it difficult to manage varying demand streams along with individual and aggregate demand signals. However, doing so effectively will allow you to offer dynamic allocation distributions based on actual customer needs.

By implementing a single solution to handle everything and relying on automated A.I.-enabled workflows to reduce complexity, users can master a solution that answers their distinct questions and limits the guesswork in their decisions.

In this game of keeping up with the consumer, it’s vital for retailers and their supplier partners to embrace the technology that will allow them to synchronise their pace so that everyone wins. Ultimately, allowing everyone to get across the finish line faster and more profitably, all the while improving the end customer experience. 

 

By Patrick Buellet, Chief Strategy Officer – Supply Chain, Symphony RetailAI

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Jun 11, 2021

NTT DATA Services, Remodelling Supply Chains for Resilience

NTTDATA
supplychain
Supplychainriskmanagement
Procurement
6 min
Joey Dean, Managing Director of healthcare consulting at NTT DATA Services, shares remodelling strategies for more resilient supply chains

Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.

The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.

A Multi-Vendor Sourcing Approach

“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.

“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.

But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?

“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.

Wielding Big Tech for Better Outcomes

So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry

“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality. 

“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”

Evolving Procurement Models 

From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view. 

“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.

“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”

“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”

But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?

“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.

The Challenges

These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.

On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.

Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”

He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”

As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”

 

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