Without visibility into actual demand, producers of consumer packaged goods and electronics will have a hard time meeting the needs of the marketplace. Yehiav says suppliers should be getting point-of-sale (POS) data from retailers. An "information-rich" environment is the key to understanding customer behavior, he adds.
That's not the entire solution, however. Some retailers are reluctant to share POS information, says Yehiav, and many manufacturers don't know what to do with that intelligence even if they receive it. Ultimately, they will need to combine that data with information at the marketing level, then figure in the needs of new-product introductions. Companies must align their short-, medium- and long-term planning processes for each item, especially in the area of electronics, where product lifecycles can be alarmingly brief.
The role of replenisher is a vital one, but it's often filled by an entry-level staffer, Yehiav says. "The probability is that a good replenisher will not be there for the long haul." Even the best forecasting technology can be undermined by poor processes. He urges the use of "open order correction," a technique whereby replenishers take into account current orders, expected consumption and the historical behavior of the retailer. In the process, "they can anticipate the order with much better accuracy in the short term."
Open order correction is especially available with new-product introductions, where suppliers must cope with short lifecycles and a wide array of SKUs. The technique helps them correctly to assess demand for items that don't have a history. Even so, it has yet to see wide-scale adoption by CPG and electronics producers. "Not a lot of manufacturers know there's a technology that can help to automatically anticipate the next order," says Yehiav.
To view this video interview in its entirety, click here.
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