Competitive Insight for the Retail Supply Chain

JDA Software offers five best practices for using demand data to drive supply chain decisions, optimize business performance

Scottsdale, AZ — May 20, 2008 — For manufacturers and distributors serving the retail market today, a consumer-driven, adaptable supply chain is just as important to gaining competitive advantage as making quality products.

According to David Johnston, JDA Software's senior vice president, supply chain and wholesale distribution, manufacturers and distributors must understand the true drivers of demand by customer and by market to leverage the power of the supply chain to quickly deliver the right products to the consumer with the least amount of incurred costs as possible.

"Best-in-class companies have long understood that an efficient and flexible, demand-driven supply chain can be a powerful driver of profitable business performance," noted Johnston.

Many companies have invested heavily in infrastructure technology to automate supply chain decisions and to provide a framework for integrated decision making. These companies are now looking to leverage their investments by driving their automated decisions with "game-changing" levels of integrated optimization that is scalable and that can model a more dynamic and global supply chain. They require technology that can scale exponentially to handle the explosive volumes of data associated with integrating point-of-sale (POS) sales into their planning processes to respond quicker to consumer preferences and market trends; especially in today's uncertain economy. They are seeking technology that can optimize and balance inventories across the entire supply chain resulting in a significantly lower level of working capital needed to deliver high levels of customer service. Lastly, they are looking for technology that can provide the robust and comprehensive modeling needed to continuously evaluate their evolving supply chains to ensure they are driving their operational decisions within an optimized network that adapts over time.

JDA offers the following five strategies — based on industry best practices — that can help companies utilize their demand data to optimize supply chain performance.

Adopt a Demand-driven, Consumer-centric Approach to Planning and Forecasting

In today's global economy, the battle of the supply chains has become more intense. Pressured by global competition, changing economic conditions, localized market events, and fast-changing consumer buying trends, achieving forecasting accuracy can be a challenge. In addition, retailers engaged in their own competitive struggles are increasingly intolerant of late deliveries and out-of-stocks, while material and operating costs continue to threaten profit margins. Today's advanced technology solutions can resolve these challenges by helping manufacturers transform their supply chains from an outdated "push" model driven by a view of orders and shipments to a consumer-centric "pull" model, driven by a view into POS sales and enhanced promotion al collaboration with their retailer partners.

Enable Your Planners to Focus Less on Statistical Analysis and More on Strategic Demand Management

Companies are enabling their planners to spend more time collaborating with sales, marketing, product management and customers by deploying advanced forecasting technology. The new technology provides the capabilities to select the most effective algorithm, optimizes the statistical parameters applies advanced forecast consumption and therefore reduces the time a planner spends on the management of seasonal-baseline demand. By doing so, planners can concentrate on more strategic activities like collaborating with internal partners and customers.

Collaborate Closely in Real-time with Customers and Trading Partners

Successful supply chain management requires real-time collaboration, not only among internal process stakeholders, but far beyond the four walls. In the fast-moving world of consumer goods retailing, maintaining close and frequent electronic communications with customers, suppliers and other business partners is the only way to ensure that all participants share a single, accurate view of demand. Best-in-class companies have developed collaboration practices to synchronize activities for the launch of new products, trade promotions, events, and seasonal surges across their extended supply chains.

Apply Performance Management Technology to Gain Value from Information

Advanced supply chain performance management is indispensable to best-in-class companies seeking to maximize the value of information captured within their supply chains. By managing the key performance metrics, companies can identify trends and launch new products to meet new demand. They can use the data to explore and expand into new and profitable markets. And, they can analyze current and historical data to gain greater insight into financial and operational performance, as well as identify and remedy performance gaps that may be eroding profitability.

Integrate Vendor-managed Inventory Programs into Your Planning Processes

According to one industry study, vendor-managed inventory (VMI) is already used by almost one-third of wholesaler-distributors, and its use is expected to double over the next five years, especially among companies in the finished retail goods, building materials, industrial and contractor supplies industries. VMI programs provide invaluable insights into early market trends, and the access they provide to extended network inventories can significantly improve the accuracy of customer-level demand forecast. Creation of a collaborative VMI and replenishment program typically results in increased planning efficiency, lower inventories and higher customer service levels.