The customer demand forecast can drive replenishment of warehouses and stores/channels on a time-phased basis. This could be for seasonal products, new product launches, promotions or for continuity products. Therefore it is essential to organise the sourcing, supply and replenishment across the entire supply chain, from suppliers to warehouses, warehouses to stores, and stores to customers, in the most cost efficient manner to meet customer service demand. So which factors must new systems embrace?
- Sourcing - managing a wide range of products, availability, pack configurations, ordering terms and costs from many suppliers, can be daunting for the retailer.
- Lead time and transportation - coordination of source availability, shipping schedules, loading constraints, warehouse constraints, travel time and costs.
- Local market complexities - demand patterns and influences of seasonality and promotional effectiveness by channel and by store/store cluster.
- Financial and physical constraints - budgets, storage limitations and desired inventory turns to achieve business objectives.
- Selling locations inventory pressure - financial impact of overstocks and markdowns, pressure to maintain high customer service level and availability to prevent lost sales and harm to customer loyalty.
- Service levels, stock targets, replenishment goals.
Thus, new systems must include a range of optimising algorithms that enable future plans and also scenarios to be established covering:
- Constraint based optimisation to meet customer demand and best profitability covering products, vendors, replenishment orders, inventory, demand, freight, labour and space.
- Can plan current and future purchase and replenishment needs, plus transfers.
- Plans for uplifts (and cannibalization) for promotions, price changes and key events, including building promotional presentation stock.
- Calculate store and channel inventory, managing waste and obsolescence of product with clear shelf life on a time-phased according to demand and supply.
- Allocate product in short supply.
- Shows the impact on the overall supply chain for projected resource, space and freight needs of current and future pack sizes, minimum/maximum stock levels, as well as shelf capacity by store.
By doing so, it is possible to reduce inventories and markdowns of obsolete stock whilst dramatically improving inventory availability where it counts – at the point of service – thereby improving sales revenues, profitability and customer loyalty and satisfaction.
At Weigandt Consulting, we can deliver these solutions – based on Oracle Retail solutions - and the best practice business processes and performance analytics – such as Sales, Inventory and Operations Planning – to deliver world class benefits to support required revenue growth, service improvements and margin increases.