One Forecast
A single version of the truth in the retail supply chain
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Sense & Respond: Replacing Anticipation with the Facts

By Stuart Silverman on June 24, 2010

Great artical in Supply Chain Digest 

Buiding Sense and Respond Supply Chain Networks; Moving from Supply Chains Focused on Trying to Predict Demand  to a Customer-Driven Chains that are Organized to Respond to Demand with Lightning Speed

I especially like the following passage: “As Nick LaHowchic (former supply chain executive at The Limited Brands) and Dr. Don Bowersox of Michigan State University recently wrote, if information “was shared fluidly between participating firms in a channel, then a great deal of “anticipation” would be replaced with facts. In a collaborative environment, it would not be necessary to forecast what others are planning to do or what they are planning to buy.” This is the critical point: visibility and information sharing will allow trading partners to simply sense and respond, within defined relationship rules.”

Simple? It may be simple once we get the people, tools and processes in place. But we have a lot of work to do to get there. First and foremost is understanding that this is now an achievable goal. And having the will power to bring about these change.

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They cracked the code on a single forecast in retail supply chain – now what?

By Stuart Silverman on June 3, 2010

My first awarenes of the concept of a single forecast in the retail supply chain was in the heyday of ECR in the 1990’s. I can still visualize the diagram that showed 3 nodes in the supply chain – at first independently forecasting and replenishing, and then using a single forecast from the stores to project all demand for the 3 nodes. The vision was intoxicating.

They tried a couple of pilot programs to make this work during that time. But the software they had developed to do this would not scale to the volumes required by retailers. We knew it was the right thing to do, but the technology know-how and tools just weren’t available at the time to get the job done.

So the industry evolved around different techniques to provide better forecasts for trading partners in the retail supply chain. Manufacturers have used demand management tools and more recently demand sensing tools. Retailers have used both single- and multi-echelon forecasting, optimization and replenishment tools. Demand Signal Repository (DSR) tools and processes have been evolving over several years to provide more timely and more granular movement data to marketers at both retail and manufacturing sites. We tried collaboration tools around CPFR guidelines and made a big hullabaloo around trading portals and exchanges. And how long have we been talking about DDSN? But an industrial strength, retail-ready solution driving all demand in the supply chain based on activity at the stores remained elusive. Until recently.

Several supply chain software vendors now claim to be able to plan item demand for all nodes in the supply chain based on inventory and consumer activity across all their stores. They cracked the code. This is great.  This is a breakthrough. Now what?

What’s preventing us from adopting a single view of the retail suppy chain? Is it technology? Is it comfort in current practices and performance levels? Is it that our success metrics reward the old way of doing business? Or are we compensating our executives for doing a great job the old way?

Maybe the reasons have to do with the new processes and disciplines required to make a single forecast work. For example, we have to change the emphasis on forecasting and forecast accuracy at all nodes in the supply chain to an emphasis establishing  accountability for a great forecast at store level. 

A single version fo the truth will win out. The question is when and what we have to do to get there. What do you think?

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Towards a Single Version of the Truth

By Stuart Silverman on May 25, 2010

In my umpteen years working in the retail and supply chain technology community, we’ve talked quite a bit about a single version of the truth. For forecasts, for item definition, for financial and performance reporting, for sourcing, for payments, etc. Its one of those holy grail topics (by the way, how many holy grails can there be?).

A single version of the truth insures that everyone is working with, making decisions and acting based on the same information. Without a single version of the truth, there is the high probablilty that different people, departments and organizations may (a) spends lots of time trying to reconcile conflicting data, (b) knowingly ignore the fact that conflicting data exists or (c) act on conflicting decisions based on conflicting data.

How important do you think this is? Maybe this is just the ‘blocking and tackling’ of the every day work in our retail it departments, but we don’t hear much about it these days. Mobile, Multi-channel and Social Media are so much more exciting topics because they are opening new sales channels to a highly connected market – but they also further complicate a single version of the truth.

So, how important is this? What do you think?

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Remember the Beer Game?

By Stuart Silverman on May 17, 2010

Did you ever play the Beer Game?

The Beer Game was created in the 1960’s at MIT as an educational tool to teach the dynamics of the supply chain. It was originally concieved of as a board game (who had computers at that time?) where the players represented different nodes in the supply chain. The principle lessons were that there are going to be massive swings of overstock and understock positions if the only form of communication between trading partners are orders being passed between them. Hence the term the Bullwhip Effect.

We’re not in the 60’s anymore. And there have been huge strides in automation and data sharing capabilities. However, even with the new technologies, average grocery store out of stocks have remained faily constant at 8% for the past 20 years.

We believe that driving all activity in the retail supply chain from consumer activity at the point of purchase will finally have an impact on OOS rates. 

In the next couple of months, we are launching a new Supply Chain Simulation Game to demonstrate that point. Where the Beer Game taught us about the pitfalls of disconnected supply chains, this new game will allow the participants to play a connected supply chain game. The goal is to experience, in a safe, interactive simulated environment, how a time phased, multi-tiered inventory and replenishment program would work – so that participants in the game could visualize the impact on their own supply and demand chains. 

This is not meant to be a pitch for any one company’s software. In fact, we will not be using commercially available software. We will be using tools that have been created specifically for this educational event. Tools that we have put together to experience the Flowcasting processes that Martin, Doherty and Harrop descibed in their book “Flowcasting the Retail Supply Chain”.

As an industry, we’ve been talking about enterprise-wide, cross-company and collaborative demand driven concepts for several years now. We’re launching this game to allow CPG Retailers and their Suppliers to explore if this is the right approach for them, when to adopt these new processes and how to move these concepts beyond the discussion phase. 

If you are interested in learning more, contact me directly at ssilverman@factory2shelf.com.

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Driving all retail supply chain planning from activity at the store is going to happen – the question is when.

By Stuart Silverman on May 12, 2010

Today most trading partners in the retail supply chain forecast demand independently. There’s some collaboration, sharing of data and allowing visibility in the demand chain. But the way our industry has evolved has resulted in retailers forecasting for their own needs and manufacturers doing the best they know how to forecast their own needs. We did the best we knew how given the tools and technologies that were available.

And of course you have to factor in corporate cultures that did not necessarily favor collaboration. But I don’t want to get in to that.

What is radically different today are the technological capabilities. Whereas 20 years ago we were happy if we could forecast demand for 20,000 items at one retail DC in a 2 hour window every night, today we have the ability to project demand for the 100,000 items that a retailer may carry for every location in the supply chain – store, retail DC, Manufacturer DC and the plant – for up to a year in the future.

Given that we have that capability, we now ask how and when do we make the change?

The reason for setting up this site is to explore how and when we can transition from planning in islands of automation, to planning the entire supply chain based on consumer activity at the store. How does it change the demand planning process, collaboration, inventory stocking rules, safety stocking parameters, goals and measurements for success? What are the implications for inventory accuracy at the store and how will we respond to it? How about the S&OP process for manufacturers?

The implications are huge. The change is going to happen. We need to start talking about how we are going to adjust to this new world. If this is a topic that interest you, join our community. Lets start talking.

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