S&OP

Nobody said this year was going to be easy, but who would have forecast we’d be in this situation 6 months ago?

Although COVID-19 first hit the news cycle in December, there was no mention of UK lockdown until at least early March. In fact, rather like Michael Fish reassuring BBC viewers there was no hurricane on the way the night before the Great Storm of 1987, politicians spent most of the rundown to lockdown assuring the UK it wasn’t going to happen!

 

Although it’s dominated the news recently, COVID-19 isn’t the only turmoil we’re facing this year. Remember Brexit? The deadline for reaching a trade deal will not be extended past December – what will the deal (or no deal) outcome mean for businesses?

In and amongst all of this uncertainty we’ve seen fundamental shifts in consumer behaviour. Partly driven by necessity and party an acceleration of existing trends, the old models don’t fit anymore.

Issues of inventory management 

One element of this is an increased pace at which orders need to be fulfilled. But at a time when wholesalers face greater order fulfilment challenges than usual, inventory management issues are getting in the way of achieving target service levels and customer satisfaction.

A range of factors are creating compound challenges:

  • Supply disruption
    • Closure and phased re-opening of manufacturing under new social distancing guidelines
    • Cross-border complications
  • Demand volatility
    • Buying patterns have fluctuated wildly throughout this crisis. From panic buying that left shelves bare, through a virtual shutdown on non-essential items while people waited to understand the financial impact of lockdown, to new trends as people have been forced to keep themselves (and their children!) occupied at home
    • The easing of lockdown has seen people’s shopping habits change again, although some of the emerging trends in consumer behaviour are now here to stay
    • There is still uncertainty about the long-term economic impacts, which will have a lasting effect on volatility. GDP has taken a massive hit and we don’t know what the shape of recovery will look like – are we going to have a ‘U’, a ‘V’ or perhaps a ‘W’?
  • Issues of visibility of stock across the supply chain
    • Where is it? Is that where it needs to be? Exactly what’s coming? When will it be where?
  • Lack of time and resource.
    • Many firms took swift action to make the most of the government furlough scheme but that has left them operating with a skeleton staff. Employees are starting to return as the scheme becomes more restricted but flexible furlough means many won’t be running at full capacity yet.

All is not lost though! There’s a huge opportunity for wholesalers to ‘start over’ and optimize now in order to get ahead in the final third of the year.

A fresh, fully optimized, start

Using S&OP software tools like AGR, it’s possible to not only address each of the challenges we’ve identified but also achieve improvements in both service levels and cash flow.

At a point where time and manpower are precious commodities, trying to manually use spreadsheets to deal with your demand and supply volatility just isn’t going to work. The AGR software can adapt to the unique patterns of demand and supply across hundreds or thousands of products. Through identifying and using the most appropriate inventory forecasting methodology for each stock unit, your system can calculate what to order and when and generate massive efficiency gains. 

Free up your working capital

By optimizing each product you will minimise the risks of stock outages or client fines for missed service levels. Having a clearer picture of how much stock to carry, what quantities to order and when to place those orders also releases cash flow through reducing unnecessary overstocks. In volatile times, cash is king – optimizing stock levels will increase valuable working capital and ensure you hit those service levels.

Let us show you the impact that the AGR software can have upon your inventory optimization – get in touch today to see just how much of a difference it could make to your service levels by the end of 2020.