According to the Centre for Retail Research, e-commerce is the fastest growing market for retail in Europe. Online sales in the UK, Germany, France, Sweden, The Netherlands, Italy, Poland and Spain are expected to grow from £132.05 billion in 2014 to £156.67 billion in 2015, reaching £185.44 billion in 2016.
This rapid growth in online shopping marks a seismic shift in consumer behaviour and the most significant effect on the retail industry in recent years. Change is swift and continues to add complexity to the overall supply chain and puts pressure on the planning process as predicting demand becomes more complex.
Yet, everything cannot be blamed on e-commerce, there are other influences in the industry that are creating an additional set of real-life challenges for today’s supply chain professionals. Product lifecycles are becoming shorter with fashion and trends far more likely to dictate pressure on supply and logistics than in the past. Whereas in previous years there was more of a focus on managing existing products and de-ranging old goods, today’s disposable culture means that there is far greater emphasis on launching new products into the market via an increasingly wide variety of sales channels.
Add to this the immediacy of social media and it soon becomes clear that organisations need to get smarter with their marketing and even smarter when it comes to demand planning and forecasting.
So how do retailers ensure quality while predicting demand levels for their products and services? As many supply chain professionals will concur, the secret to successful demand planning is a three-pronged approach combining data, process and technology. In particular, technology has an important role to play in demand planning but there is no magical solution.
Here are my six top tips for maximising the latest planning tools and predicting demand:
- Look to automation to build speed and agility into your organisation’s supply chain framework
- Make sure forecasting and planning tools integrate seamlessly with Enterprise Resource Planning (ERP) systems. Utilising supply chain functionality within ERP means demand changes can be quickly responded to and managed to lower inventory levels, reduce stock-outs and reduce workload through automation
- Consolidate your organisation’s supply chain management knowledge and promote shared learning across the organisation
- Collect good quality sales data in a systematic way within a basic set of parameters to enable effective optimisation of stock levels. These parameters might include lead time, order frequency, minimum quantity and unit quantity data
- Define and implement clear processes around demand planning and replenishment that utilise your underlying supply chain management tools.
- Tap into the powerful functionality of today’s forecasting engines to spot trends, predict future and seasonal demand changes, such as Black Friday, and balance demand with supply.
In summary, good demand planning is critical to success. Get it right and your organisation will benefit from better deployment of people, money and materials, plus accurate product availability and delivery dates leading to increased customer satisfaction; and ultimately profitability.