This shift is being enabled by more robust technology and by more focused attention on the part of retailers, he says. In terms of technology, Johnston says that retailers traditionally have lagged behind manufacturers in supply chain planning because they require solutions with greater scale. "The number of SKUs and level of granularity of a manufacturer is far smaller in terms of scope than what a retailer would have to have in order to plan all the way down to the store and shelf levels," Johnston says. "The amount of data that would have to be analyzed and optimized grows exponentially when you go to the store and shelf. In the past, the technology just was not able to provide the scale required to manage that amount of data."
As technology has advanced, very scalable platforms have become available. "These platforms can handle the volume of data that is required in retail to have a time-phased view of what is happening throughout the supply chain," Johnston says. But scale is not just a factor of technology, he adds. "Scale also relates to the ability to manage that amount of data. So scalability on productivity and scalability on technology both are important."
With technology as an enabler, retailers began moving beyond tactical collaboration, focused on ensuring short-term product flow, to more strategic collaboration that enables accurate order projections, as opposed to sales projections, Johnston says. Manufacturers, in turn, are able to better plan their demand and truly improve the efficiency of their supply chain.
The end result, Johnston said, is that both retailers and manufacturers are able to reduce inventory and enjoy improved shelf availability, "especially around new products and promotions, which are areas where they struggle today."
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