Executive Briefings

What Ails Channel Management?

Some brand owners are working closely with retailers, but there's still a big disconnect between planning and reality, when it comes to getting the right product to the right stores, according to Prakash Arunkundrum, director of process consulting with i2 Technologies.

Channel management has been a big challenge for suppliers and retailers for a long time. Efforts to improve it have evolved from traditional Collaborative Planning, Forecasting and Replenishment (CPFR) to collecting point-of-sale (POS) data from retail partners. Nevertheless, says Arunkundrum, retailers continue to complain to brand owners that their products are in short supply in some stores, and overstocked in others. "What we've found when we actually look at the POS data, and factor in the store presence and pricing competition, is that there's a gross misalignment between the sell-through and inventory at that store or region," he says.

Despite a reliance on CPFR and vendor-managed inventory  programs, there are still many inefficiencies in most retail supply chains. Short product lifecycles and fickle customers are further complicating the situation. Time, then, for supply-chain partners to achieve the next level of planning - at the region, store and shelf levels.

To achieve a truly "customer-centric" approach, companies must take several steps. They need to begin collecting information on promotions from marketing executives, who might not have been sharing it outside their department. They need to assign a small group of people to look at the data on a weekly basis and act on it. Replenishment of stock should be carried out in a synchronized fashion, looking at safety stocks at the store level along with demand-shipping "playbooks." Companies should set up depositories of information about what they and their competition did in the past about promotions. They should run simulations to identify the optimum strategy. Lastly, says Arunkundrum, they should combine all of the intelligence "in a framework where you can monitor and analyze this information on a routine basis."

He recommends that brand owners start with internal pilots that are limited to specific categories, and expand from there. "[Once] you start sharing consumer-centric info with retailers," he says, "you'll start seeing a different level of collaboration."

To view this video interview in its entirety, click here.

Channel management has been a big challenge for suppliers and retailers for a long time. Efforts to improve it have evolved from traditional Collaborative Planning, Forecasting and Replenishment (CPFR) to collecting point-of-sale (POS) data from retail partners. Nevertheless, says Arunkundrum, retailers continue to complain to brand owners that their products are in short supply in some stores, and overstocked in others. "What we've found when we actually look at the POS data, and factor in the store presence and pricing competition, is that there's a gross misalignment between the sell-through and inventory at that store or region," he says.

Despite a reliance on CPFR and vendor-managed inventory  programs, there are still many inefficiencies in most retail supply chains. Short product lifecycles and fickle customers are further complicating the situation. Time, then, for supply-chain partners to achieve the next level of planning - at the region, store and shelf levels.

To achieve a truly "customer-centric" approach, companies must take several steps. They need to begin collecting information on promotions from marketing executives, who might not have been sharing it outside their department. They need to assign a small group of people to look at the data on a weekly basis and act on it. Replenishment of stock should be carried out in a synchronized fashion, looking at safety stocks at the store level along with demand-shipping "playbooks." Companies should set up depositories of information about what they and their competition did in the past about promotions. They should run simulations to identify the optimum strategy. Lastly, says Arunkundrum, they should combine all of the intelligence "in a framework where you can monitor and analyze this information on a routine basis."

He recommends that brand owners start with internal pilots that are limited to specific categories, and expand from there. "[Once] you start sharing consumer-centric info with retailers," he says, "you'll start seeing a different level of collaboration."

To view this video interview in its entirety, click here.