Nick Calver, Marketing Director
80% of senior executives admit their supply chains falter under fluctuating demand. What if you could be part of the 20% that doesn’t?
Trying to keep track of products across a complex network of depots and stores takes a lot of work. It means monitoring sales, inventory, and service levels daily to ensure products are available on the shelves at the right locations in the right quantities. If you rely on category data supplied by market measurement firms, then there is always that risk that you are acting on outdated, weeks-old insights. By then, the critical window for making proactive decisions has already closed.
80% of senior execs say their supply chain model can’t cope with changes in demand.
When on-demand is the norm, can your supply chain respond? – Ernst and Young
Controlling the uncontrollable
Even during times when production was consistent and sales patterns were more predictable, measuring and managing inventory was tough. Now, there are even more factors to monitor.
Today, supply chain issues, inflation, technological disruption, climate change, shifts in consumer behaviours, and sustainability concerns – you name it – all pose increasing hazards to a CPG’s ability to coordinate production and manage the supply chain effectively.
Traditional analysis, which takes a backward look at sales performance, service levels, and in-store availability, might have been effective under more stable demand and supply conditions. But it can quickly catch you off guard in today’s less predictable environment.
Reading the signals for effective demand response
To overcome bumps and make the most of opportunities that come down the track, you’ve got to address them quickly, confidently, and decisively. And the only way to do that is to have the best possible idea of what’s happening now and predict with confidence what will happen next.
That’s difficult to do if you struggle to get on top of questions like:
- How can you accurately identify the true demand for your products, comprehend their variation by season, region, and promotional activities, and assess sales performance within this context?
- How can you swiftly evaluate stock levels across various customers, depots, and stores to prioritise order fulfilment when production falls short of the demand?
- How can you understand short-term order demand to proactively inform customers about potential issues and propose effective solutions before these issues arise?
- How can you prioritise incremental sales opportunities based on their value, moving beyond a simple Availability % score to minimise Lost Sales Value, especially during promotional periods?
“The hardest problem is anticipating demand. What makes it harder still is that we’re serving multiple, different channels with different levels of urgency. And so, to anticipate that, we also need to understand something about the real-time state of demand.”
George Lawrie, VP & Principal Analyst, Forrester
Creating growth opportunities in the moment
Winning CPGs adopt a demand intelligence approach to answer questions like those above. This is about more than just looking at immediate metrics like availability percentages. It’s the ability to read the situation as it emerges and perform a deep dive to understand the real cost of missed sales opportunities.
What makes this approach stand out? Daily data connects all the pieces of the puzzle. From the journey of goods from suppliers to depots (inbound) and then from depots to stores (outbound), this process links everything to the stock levels at both depots and stores.
Using this approach, you can pinpoint exactly where and why you fall short in performance and do it in the moment. It’s only when armed with this knowledge that you can start to tailor and prioritise actions. Whether that’s by product, location, or a blend of both, the goal is to find the quickest and most efficient ways to grow value.
How?
- Adapt product distribution: Strike the right balance in your product distribution to align with shoppers’ demands. This might mean increasing or, when necessary, decreasing your product distribution.
- Address low-availability issues: Identify products that are often out of stock and work out temporary solutions, like offering different pack sizes, until you can sort out the supply issues.
- Correct stock errors: Spot potential mistakes in your inventory records and encourage stores to take action to fix these issues.
- Optimise field sales efforts: Focus your field sales teams on specific product and store combinations that offer the highest value to your company and retail partners.
An example of the need for automated fresh daily data in action
To illustrate the real-world impact of automated daily data, consider the experience of a leading dairy producer. This producer’s reliance on daily trading data is paramount for efficient forecasting and managing customer operations. Their demand planners generate a detailed six-week forecast, accounting for potential variations, particularly during promotional periods.
The key to their successful forecasting lies in the ability to receive immediate feedback on the actual impact of each promotion. When sales figures significantly deviate from projections, the customer operations team must inform the demand planners promptly. This rapid communication enables necessary adjustments to the forecast to align production with demand.
Time is of the essence in this scenario. These adjustments must be communicated to the production department by 10:30 a.m. each day to prevent disruptions in the schedule.
Want to see SKUtrak in action? Contact us now for a demonstration and discover the impactful benefits of daily, actionable demand intelligence.