Banish Forecasting Errors, Overstocks and High Logistics Costs

At this very moment in your supply chain, what is the current demand for any given product?

It seems like you would need a magic wand to answer this question. I mean, how is it possible to know what customers in your market are buying right this moment, so that the information is signaled back through the entire supply chain?

This is the kind of information that would allow suppliers to provide even better orders and deliveries that respond to real-time information versus fallible demand forecasting. With this kind of information, you could avoid pitfalls like late shipments, overstocking, and unnecessary transportation costs.

It is possible through Supply Chain Transformation and it's not a magic wand. By using sales and operations planning, aligned organizational structures, and the right technology, it's possible.

For example, let's say you are in the dog food business. Right now, a customer in the grocery store is walking down the pet food aisle with a coupon that she intends to use to buy four bags of puppy chow. After she makes the purchase, a signal goes down your entire supply chain that drives back to the distribution center (DC).

As more customers come into the store with the same coupon, real-time data is sent back to the DC. In an operational process that is as close to custom as you can get, this data "tells" the dog food supplier to re-stock that particular store's puppy chow inventory to make up for the increased demand.

True, the DC may have to deliver more often to the store, but it's not deliveries based on forecasting of what might happen in the market. It's deliveries based on what is happening with customers on the demand side.

Supply Chain Transformation means supply management and demand planning that leads to excellent customer service and reduced costs for suppliers. As a nice bonus, supply chain transformation also makes forecasting errors a thing of the past.

What moves is your company making to transform supply chains?

Jim
Tompkins Inc.