When it comes to inventory and replenishment planning, retailers have historically maintained a lead over their wholesale distribution counterparts. But there’s good news: wholesale distributors can now easily and effectively connect supply and replenishment planning to retail customers and, ultimately, to shoppers.
Today’s marketplace presents an increasingly unpredictable balance of consumer demand that often results in too much of the wrong inventory and too little of the right inventory, and in the wrong places. This has caused a shifting of priorities in recent years, with retailers now claiming better forecasting as their number-two priority, behind only customer analytics. This puts pressure on brands and wholesale distributors to become better partners by identifying more precise forecasting strategies and delivering more accurate, and flexible, projections and plans.
The disconnect between where demand is triggered and where it is fulfilled is often significant, and this gap makes for unreliable development of localized product allocation strategies. With stores no longer the exclusive or most reliable source of demand signals, retailers and distributors have had to approach forecasting from a new angle. The response of successful distributors has been to implement new processes and technology applications that streamline information aggregation, analysis and communication.
The Future of Forecasting
The disruption in standard practices has come about due to vast improvements enabled by next-generation forecasting systems. This new technology can perform more in-season and local demand re-forecasting, and can continuously refine and revise predicted outcomes and adjust sourcing accordingly. Let’s explore the three most important ways that wholesale distributors can improve inventory and replenishment planning, to create more profitable outcomes for themselves and their partners.
1. Know when, where and how inventory is being fulfilled.
The impact of omnichannel retail has affected distributors faster than ever expected. In fact, availability of warehouse space across the country hit a 16-year low last year, with ecommerce placing a tremendous strain on traditional infrastructure. As more and more retailers start to leverage store networks as local distribution centers, the amount of inventory in each location is spread more thinly, and the margin for forecasting error across the supply chain becomes ultra-narrow. Stellar replenishment and inventory planning are critical, and knowing exactly which adjustments need to be made, at precisely the right moment, is key, too.
To do this, distributors must deploy systems that have the power to dynamically process a complex and diverse group of orders and other market signals, and to update fulfillment execution based on best practices. Moreover, this needs to happen in real time to create responsive and accurate distribution decisions. Automation is also vital, so that store reps can avoid manually touching orders each day, freeing them up for other tasks, reducing manual errors and improving time-to-action.
2. Observe what your retail partners are doing.
Retailers have made and continue to make increasingly impressive steps to create a consumer-centric world – one that’s built on fluid behavior information transfer with real-time access to big data and analytics. In a vacuum, this will enable them to achieve perfect availability. Crucially, though, they can’t understand customers without data from their supplier partners, including brands and the distributor.
Working together efficiently is key for both parties. By taking advantage of tools that provide more transparency and data visibility – such as vendor-retailer visibility portals and business intelligence analytics that measure collaborative performance – partners across the supply chain gain new insights and create a clear line of sight from one end to the other. By creating more accurate data feeds that allow A.I.-enabled systems to deliver hyper-accurate and real-time projections, all parties benefit from more efficient operations and more profitable outcomes.
3. Ensure you have a handle on your demand forecasting.
Of course, demand forecasting is essential for anyone in a retail network, and especially for distributors. This isn’t new, but it’s a quickly evolving practice. Today, it’s often challenging for distributors to manage varying demand streams along with individual and aggregate demand signals. However, doing so effectively allows you to offer dynamic allocation distributions based on actual customer needs.
Mature solutions in the market fall short, and distributors are often left in the unenviable position of having to cobble together disparate vendor solutions to solve a single challenge. By implementing a single solution to handle everything and relying on automated A.I.-enabled workflows to reduce complexity, users can master a solution that answers their distinct questions and limits the guesswork in their decisions.
What Comes Next
In this game of keeping up with the consumer, can retailers and their supplier partners synchronize their pace so that everyone wins? I believe they can. With so many options available at their fingertips, the right technology, if embraced properly, can get everyone across the finish line faster and more profitably.
Patty McDonald is global solution marketing director for Symphony RetailAI.