The shelf-connected supply chain centers on the strategic relationships between the largest manufacturers and the key critical-mass retail partners that can drive differences in their deployment and manufacturing strategies. Trading partners engage in store-level collaboration on shelf-driven, time-phased order plans that translate back up through the entire supply chain.
Suppliers collaborate to create a time-phased order plan on behalf of the retailer who may not have the capability to do so. Many large retailers today still struggle with developing or completing accurate, bottom up time-phased order plans that are driven from shelf sell-through.
Manufacturers with the capabilities can strategically elevate their partnership levels with retailers, taking the lead on:
¦ Conducting shelf-driven forecasting
¦ Converting the shelf forecast into an order plan
¦ Examining promotional lift based on store-level data
¦ Developing optimal promotion and pricing plans
¦ Driving the shelf signal to create more granular planograms and assortments
Many manufacturers who are forced to manage their supply chains with their limited shipment-based demand view experience unplanned swings in order patterns resulting from a retailer’s decision to change its strategies in the areas of service level and safety-stock settings, lead times, transportation modes, store network sourcing and order parameters.
Collaborating around replenishment policies and store-level forecasts enable both the supplier and retailer to better manage the flow of merchandise to profitably serve the consumer.
Synchronize and conquer
By incorporating shelf-connected supply chain practices, trading partners become aligned not only on the next order but also on a longer horizon of planned orders. The insights associated with understanding the strategies driving the time-phased planned orders are leveraged by both supplier and retailer in a mutually beneficial shelf-connected model. As shelf-connected programs become more sophisticated, the partners move toward collaborating on sales and order forecast outputs; and on modeling distinct strategies that drive differences in those plans. The ability to scale is a key enabler and prerequisite to being able to effectively engage the shelf-connected supply chain model, and manufacturers managing sell-through at the shelf must be equipped to handle the associated exponential increase in planning intersections.